My Lifetime LearningEducation Credit is much Lower Than Last Year even though my income was lower this year.

[Majerli]

I researched it and it says that the lifetime learning credit is phased out based on income. What doesnt make any sense to me is I received the full 2000$ credit last year when my income was double what it was this year. This year my income is less and I was in school for more than half the year and the LLC was significantly less this time around. Just curious what the reason could be or if I made a mistake when filing. 

[xmasbaby0]

The LLC is not refundable.  It can only reduce your tax owed down to zero.

[Majerli]

I must just be confused about the way it works because, long story short, I amended my return because I forgot to put my school information in and once I did it says I'm getting back about 600$ more than I initially recieved and that I'll be getting it by check, and I could have swore it was because it said I qualified for the education credit but maybe it's for some other reason. To be clear the only documents I filed in my taxes include my W2, my 1098-T and 1098-E, if that helps make sense of things at all. I just noticed that under last years return I recieved a full 2000$ whereas now my circumstances arent much different aside from the fact that my income was less and the amount in that same box is significantly reduced this year. 

[xmasbaby0]

@Majerli Your 2022 refund may be lower than your 2021 refund for a variety of reasons....Lots of people are getting lower refunds for 2022.

We cannot see your screen, your return or your account.  Have you entered ALL of your 2022 information?  All your income, etc.?  Many tax documents that you need do not arrive until late January or even February, so maybe you do not have it all there yet.

Lots of tax laws changed.  Those changes are resulting in lower refunds for lots of people.

There is no recovery rebate credit (stimulus $) for 2022.  The childcare credit is  less and is not refundable. The child tax credit is different and it is less.    And for some people, earned income credit is different because there is no “lookback” to an earlier year.  Those are some of the reasons your refund may be less.

There are a lot of variables that affect your refund or tax due including how much you earned, how much tax you had withheld, your filing status, the number of dependents you claim, your deductions and credits, etc.  You may have lost Earned Income Credit or the Child Tax Credit— did a child turn 17?  If you received the EIC last year, remember that changes in the amount you earn have a big effect on the amount of EIC you can get. (Sometimes earning more money means less EIC)  Are you 65 or older ?  If so, your standard deduction is higher. Everyone has a higher standard deduction now so it is harder to use itemized deductions.

And…..the child tax credit is very different for 2022    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 2022 tax return.  The “old” rules are back.   The maximum amount of the child tax credit is now $2000; the refundable “additional child tax credit” amount is $1500.   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 $1500.  If your child is older than 16 at the end of 2022, you do not get the CTC.  But you may still get the non-refundable $500 credit for other dependents instead.

And of course, always check your own data entries, looking for errors such as misplaced decimals or extra zeros.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-refund/refund-go-compared-last-year/...

Print out 2021  and 2022  and compare them side by side to see what is different. 

https://turbotax.intuit.com/tax-tips/tax-payments/video-why-would-i-owe-federal-taxes/L3VXudPiN

[Majerli]

I appreciate your thoughtful response but most of this would not apply to me as I have no children. But if a lot of the tax laws have changed and people are getting lower refunds in general as you said then I'm sure it's probably something as simple as that. I think I just expected to get the same credit as last year particularly because my income was lower and was just surprised when I saw that it wasn't.  Could be a lot of reasons I suppose, as you mentioned!

[xmasbaby0]

@Majerli Print out the returns, lay them next to each other and compare them line by line to find what is different.

[Critter-3]

Since the LLC is limited to your tax liability and your income is less then the fed tax is less which means the credit is less.  Print the 1040 & the 8863 and review them carefully.