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Kbeard619
Returning Member

Child Tax Credit not Reducing Federal Amt Owed

I'm self employed and filling jointly with my wife who has a part time w4 job. Our total income is almost exactly 100k. After deducting my business expenses our taxable income looks like it should be about 77k. Turbo tax is giving me a federal tax owed of almost 9k which seems about right except we have 3 kids and TT has already indicated we qualify (I've already put in the info and gotten the green checkmark ) for the child tax credit for each of them. I would expect a tax bill closer to 3k because of this (3 kids 2k each of credit should be 6k of credit and 9-6=3). How do I get TT to register the child credit in the amount of federal tax owed or what am I missing about how credits work?

3 Replies
xmasbaby0
Level 15

Child Tax Credit not Reducing Federal Amt Owed

CHILD TAX CREDIT

 

There was lots of hype in the news about the new $2000 Child Tax Credit when the tax law changed for 2018 and beyond.    Unfortunately, some people do not yet understand that it does not mean they will automatically receive $2000 per child just for filing a tax return.

Do not assume your refund will include $2000 per child for child tax credits.  It does not work that way.  The CTC is used first to reduce your tax liability to zero. After that, there is a refundable portion —up to $1400 — called the Additional Child Tax Credit that is calculated based on the amount of income you earned.  You do not necessarily get the maximum amount.  You get 15% of the amount of income earned above $2500--UP to the maximum amount possible.

 

If your child turned 17 in 2019, even on the last day of 2019, you do not get the child tax credit.  There are no exceptions to the rule.  You can still claim your child as a dependent.

Your child must have a Social Security number to get the CTC. 

If your child was born in 2019 you need to say the child lived with you for the WHOLE year.

If your child lived with you for less than half the year you cannot get CTC.

If you did not earn at least $2500 you cannot receive the child tax credit.  Beyond that amount the CTC you receive is affected by your tax liability and the amount you earned.  You might not get the full $2000 of CTC.

 

The child tax credit is reduced by $50 for every $1000 of AGI over these limits:

Married filing jointly                $400,000    (CTC disappears at $440,000)

 

Single, Head of Household, Married Filing Separately or qualifying widower               $200,000  (CTC disappears at $240,000)

 

Look at your 2019 tax return to see the credits you received:

Child tax credit line 12a

Additional Child Tax Credit line 17b   (schedule 8812)

Credit for Other Dependents line 12a

 

PREVIEW 1040

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

 

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

https://ttlc.intuit.com/questions/3029430-why-is-my-child-tax-credit-smaller-this-year

https://ttlc.intuit.com/questions/4505689-why-am-i-getting-the-credit-for-other-dependents-instead-o...

https://ttlc.intuit.com/questions/4499708-what-is-the-500-credit-for-other-dependents-family-tax-cre...

 

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
Kbeard619
Returning Member

Child Tax Credit not Reducing Federal Amt Owed

I'm not suggesting I should get a return. I know I owe money. I'm saying it doesn't appear that the credit is being applied and I think I should owe less. My children are all under 17 and we make much less than 400k. Is there something I should do in the software to make sure the credit is properly reducing my tax liability?

KarenJ2
Expert Alumni

Child Tax Credit not Reducing Federal Amt Owed

I'm not sure why your child tax credit is not calculating.  Please check the following:

  • Program asks for each child in the My Info section: Did this child pay for more than 1/2 her living expenses.  Make sure you answered No.
  • When you get to the end of the My Info section where you enter the child's name, etc..You should get a screen that says "Good News!  Your child qualifies as a dependent.

Please see below for the requirements for the Child Tax Credit:

 

To claim the credit

To qualify for the credit, you must meet these basic requirements:

  • The dependent must be a U.S. citizen or resident.
  • You can claim your child, stepchild, adopted child, grandchild or great-grandchild.
  • Under a recently revised definition of "qualifying child," you can also claim the credit for siblings, step-siblings and half-siblings that live with you.
  • Foster children qualify if they were placed with you by a court or authorized agency.
  • To claim the credit, children must live with you more than half the year and must not provide more than half of their own support.
  • You must report each qualifying child's Tax Identification Number (TIN) on your return. It's usually the child's Social Security number.  The child must have a social security number to qualify.

 

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