TurboTax error in calculating 2021 child tax credit???

[deanne98]

We are married filing jointly with 4 kids (ages 7 - 15), meeting all 7 requirements for the full $3000 per child tax credit (so $12000 total). We received $6000 in advance payments, but when I enter that info into TurboTax, it says we are not eligible for any more (it reduces our tax return form $6,321 to $321). How do we get TurboTax to recognize we qualify for $6000 more?!

Is this an error in TurboTax or am I missing something? Super frustrating because I would be done with taxes if not for this issue and now wasted an hour or so looking into it!

[ThomasM125]

It may be that the child tax credit is entered on your tax return before you entered the $6,000 in advance payments. You can check this by looking at your form 1040. The child tax credit would be listed on line 19 and/or line 28 of your form 1040.

You can view your form 1040 while working in the online version of TurboTax by following these steps:

While working on your return in the Federal section of TurboTax:

   1.  Choose the Tax Tools icon on your left menu bar

   2.  Tools

   3.  View Tax Summary

   4.  Choose the Preview my 1040 on your left menu bar

[xmasbaby0]

Federal>Deductions and Credits>You and Your Family>Child Tax Credit

The IRS is sending out letter 6419 to you.  It will show the amount of advance child tax credit that you received during 2021.  Enter the information from that letter carefully.   The remaining amount of CTC that you can receive will show up on line 28 of your 2021 Form 1040.

PREVIEW 1040

https://ttlc.intuit.com/questions/1901539-how-do-i-preview-my-turbotax-online-return-before-filing

Click on Tax Tools on the left side of the screen. Click on Tools. Click on View Tax Summary. Click on Preview my 1040 on the left side of the screen.

NOTE:   The CTC is indeed a “credit” that can be applied toward any tax liability that you would otherwise have to pay as “tax due”  to the IRS.

And…..Ignore that “refund monitor.”  The software STARTS OFF by giving you the full amount of CTC.   When you enter the amounts from your letter, the software reconciles the amount you received with the amount you can still get IF you are eligible to get the other half.     You are NOT losing any of the credit; you are not being taxed on the credit.  Don’t get confused by the reconciled amount.   You got some of it already—-now you get the rest.

 If you received the advance payment and are NOT eligible to get the other half, then it will not show up on line 28.  (Such as in some cases where the wrong parent got the advance payments, etc.)

That “refund monitor” should not be taken seriously until every last morsel of your data has been entered.

And there is a phase out if your income is higher than the limit:

Q C2. Can my Child Tax Credit amount be reduced based on the amount of my 2021 income? (added June 1...

A2. Yes. The Child Tax Credit phases out in two different steps based on your modified adjusted gross income (AGI) in 2021.

The first phaseout can reduce the Child Tax Credit to $2,000 per child.

• That is, the first phaseout step can reduce only the $1,600 increase for qualifying children ages 5 and under, and the $1,000 increase for qualifying children ages 6 through 17, at the end of 2021.

The second phaseout can reduce the remaining Child Tax Credit below $2,000 per child.

For additional information on the amounts of modified AGI that reduce the 2021 Child Tax Credit, see Q C4 and Q C5, below.

Q C4. How does the first phaseout reduce the 2021 Child Tax Credit to $2,000 per child? (added June ...

A4. The Child Tax Credit begins to be reduced to $2,000 per child if your modified AGI in 2021 exceeds:

• $150,000 if married and filing a joint return or if filing as a qualifying widow or widower;
• $112,500 if filing as head of household; or
• $75,000 if you are a single filer or are married and filing a separate return.

The first phaseout reduces the Child Tax Credit by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that is applicable to you.

[deanne98]

Thanks for the comments! I pored over the forms and see that they are correct. I was surprised that TurboTax had our child tax credit showing as less than last year's in the side-by-side comparison, but they just reduced it by what we already received, which makes sense. I was also surprised we got our smallest tax return in many years, so thought (hoped) there was a problem. 

[Mike9241]

Turbotax starts out with the max CTC once you enter the dependents. so it would show a $12000 refund but that's before the advance payment of $6,000 you received so once that's entered your refund drops by $6,000. look at form 8812.

[Critter-3]

Ok ... let me see if I can shed some light on this situation that many folks will find themselves in this year ... that advance was probably not the best thing to happen for some.  Here is an example for just one child ... 

Last year the credit was $2000 of which only $1400 could be refunded after taxes were paid down.

This year the credit is $3000 (or $3600) of which you got 1/2 up front  leaving just $1500 (or $1800) for the credit on the return to pay down your tax bill.

So last year the credit on the return was $2000 on the return and this year it is only $1500(or $1800) since you got 1/2 in advance  ... you are short $500 (or $200) on the return.   You are thinking the credit went up so my refund should be more but remember you got some in advance.  Review the 2020 & 2021 returns side by side to see this in action.  

You need to look at the entries from line 24 to 31 on your tax return form 1040. Then compare them to the same lines on last year's tax return. On these lines you will see your Total Tax (line 24) and the deductions from that tax (lines 25 to 32.) That is where you will find the difference between this year and last year, and that may explain why you owe taxes this year or have a lessor refund than expected.