Why is my tax return less than my child tax credit refund?

[xmasbaby0]

Your tax return is the Form 1040 you are sending to the IRS.   Money you are getting back is your refund.

Your child tax credit is used first to reduce any tax you owed.  The rest---if there is anything left of the $2000 per child---is added to your refund as the Additional Child Tax Credit.

The 2021 child-related credits were very generous.  Lots of people are still being taken by surprise when they find out the credits for 2022 and 2023  are lower than they were for 2021.

The tax laws changed for child-related credits and are much less generous for 2022 and 2023.

Make sure you have entered your child as a dependent in My Info, and that you have entered the child's Social Security number.    Careful— do not say that your child’s SSN is not valid for employment.  If your child was born in 2023 make sure you said he lived with you the whole year.  There is an oddly worded question that asks if the child paid over half their own support.  Say NO to that question.

Have you entered income from working in 2023?  If not,  you will not receive an income tax refund based on having dependent children.

The rules for getting the child tax credit on a 2021 tax return and now on a 2023 return are very different.  For 2021 you could get $3600 for a child under 6 or $3000 for a child between 6 and 17 even if you had no income/did not work.   That is NOT the way it will work for your 2023 tax return.  The “old” rules are back. 

  The maximum amount of the child tax credit is now $2000 per child; the refundable “additional child tax credit” amount is $1600.   In order to get that credit, you have to have income from working.  The credit is calculated based on the amount you earned above $2500 multiplied by 15%, up to the full $1600 per child. If the amount you earned was too low, you will not get the full $1600.

 If your child is older than 16 at the end of 2023, you do not get the CTC.  But you may still get the non-refundable $500 credit for other dependents instead.

https://ttlc.intuit.com/questions/1900923-what-is-the-child-tax-credit

https://ttlc.intuit.com/turbotax-support/en-us/help-article/taxation/additional-child-tax-credit/L6x...

https://www.irs.gov/help/ita/does-my-childdependent-qualify-for-the-child-tax-credit-or-the-credit-f...

[Vanessa A]

The Child Tax credit is a non refundable credit worth up to $2,000 per qualifying child. This means, that for this year, the nonrefundable Child Tax Credit will lower your tax liability down to $0.  So if your tax liability on line 18 is $1,300, you would only be eligible for $1,300 of the Child Tax Credit. In order to qualify for this credit, you must have a qualifying child, have a tax liability to be reduced by the credit and have income of less than $200,000 if single and $400,000 if married filing jointly.  If your income is greater than these limits, the credit is phased out gradually. 

If you do not have a high enough tax liability to claim the credit, then you may be eligible for the Additional Child Tax Credit.  This credit, is the refundable portion of the child tax credit.  It is worth up to $1,600 per child. 

You cannot claim these credits if your filing status is married filing separately, unless you have lived apart from your spouse for the last 6 months of the year.  It is calculated by taking subtracting $2,500 from your income and then multiplying that number by 15%.

A few things you can check if you think you should have received the child tax credit and you didn't or think you did not receive the correct amount.

• Double check your entries starting with the personal info section making sure you have entered all information including social security numbers for your kids.
• Did your child live with you for 6 months or more during the year?      If not, you do not qualify.      If your child was born during the tax year, you will need to select that they lived with you for the entire year.
• Did you enter your income?  Did you double check your entries? You need to have income to get the credit, so if you do not have in excess of $2,500 or you have income above the phaseout, you may not qualify for the credit.