Why my Federal Refund decreased after I entered "Advanced Child Tax Credit" and "2021 Economic Impact Payments"

[wchongzhao]

Hi There,

Not sure if anybody has same situation with me. But TurboTax seems don't work properly this year.

In the last year, after I entered the EIP amount I received, TurboTax could calculate the amount IRS owe me and add it into the Federal Refund anmout.

But in this year, my Federal Refund decreased after I entered "Advanced Child Tax Credit" and "2021 Economic Impact Payments", even though TurboTax clearly states IRS owe me thousands of dollars! 

Any help would be greatly appreciated!

[xmasbaby0]

What you may not realize is that as soon as you began to prepare your tax return, the software was giving you the $1400 and it was shown on that "refund monitor" -----but when you entered that you received it already, the software had to reconcile the payment you received,   You cannot get it twice---so it looked to you like you "lost" $1400.   You did not lose it---you just cannot receive it twice

That also happens with the child tax credit advance payments.   The software starts out as if you did not receive any of it but then it has to reconcile the payments you received last year.

You are not losing anything nor are you being taxed on the stimulus or the child tax credit.   You just need to follow the calculations that are on the Form 1040.

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.   Then it will calculate down to the refund you see on line 35a or the tax due on line 37.

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.

[wchongzhao]

@xmasbaby0 thanks for your quick reply!

But I'm really curious if it is true that TurboTax lists the total credit in the beginning:

1. My beginning Federal Refund is only 6000+ (but Advanced Child Tax Credit + 3rd EIP should be 6,600 + 5,600 = 12,200)

2. row 28 of my 1040 already shows 3,600, even without the IRS owed amount of 1,400 (3rd EIP), I'm expecting my Federal Refund would be over 3,000, but it only shows 2,000+ as of now.

BTW, I found another critical bug of HSA calculation as well - the Federal Refund decreased when I choose I have full year coverage High Deductible Insurance, but remain no change if I choose NO High Deductible Insurance - It seems TurboTax is calculating it in an opposite way, ideally it should remain no change if I choose the right option, and count all my HSA contribution as taxable if I choose NO, makes sense?

I'm really confused now with TurboTax, does that mean I have to re-calculate the numbers and fill out 1040 by myself..?

[wchongzhao]

I have tried to fill out 1040 by myself, interestingly the refund is same as what TurboTax calculated - regardless how weird TurboTax behaved during the application.

So I guess TurboTax does pre-refund in some way, then get it away based on our following steps. Just don't know what's inside of the box.