My child tax credit for 2 kids should be reducing the federal tax I owe ($4,261) by $4,000 - but it is only reducing it by $360. Is there an error in the calculation?

[MindyB]

I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Online:

1. Sign into your online account.
2. Locate the Tax Tools on the left-hand side of the screen.
3. A drop-down will appear. Select Tools
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.
6. Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

1. Open your return.
2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent” *
3. This will generate a message that a diagnostic copy will be created.  Click on OK and the tax file will be sanitized and transmitted to us.
4. Please provide the Token Number (including the dash) that was generated in the response.

*(If using a MAC, go to the menu at the top of the screen, select Help, then, “Send Tax File to Agent”)

[dundaru]

Thank you for your quick response!

I generated the diagnostic file and the Token Number is 1296326.

Thank you in advance.

[SteamTrain]

@dundaru 

One thing to note....if a lot of your income is Self-Employment income, then the SE tax cannot be reduced by the child tax credits.

Could be other things in play here.....but that "might" be part of it.

Their review of your diagnostic file should reveal what the issue might be.

[MindyB · Accepted solution]

Thank you for providing your file.  The children's information is input correctly. I have reviewed the information, and your income tax is computed at $360 on your 1040 Line 16, which is the amount of Child Tax Credit you've received.  The additional tax that you are being charged is self-employment tax, which cannot be reduced for Child Tax Credit, as @SteamTrain mentioned.

Here is some more information you may find helpful: Child Tax Credit for 2024 - 2025

[dundaru]

Thank you both @stester and @MindyB for your quick and correct responses!

I really appreciate your help, have a great day.