One question in TurboTax 2021 asks for "tax after credits" amount from my 2020 Form 1040, Line 22. I do see amount BUT when I cross-check that amount with page 20 (Two Year Comparison), the Tax after Credit amount is much different for 2020.
What am I missing? Or is my cross-check unnecessary?
Thanks!
It is a good idea to cross-check, but a number of nonrefundable credits in 2020 became refundable in 2021. This means your tax is figured on an amount that had credits taken from it in 2020, but those credits are deducted from the tax you owe in 2021.
For example, let's assume you qualify for the full Child Tax Credit in both years. In 2020 $2,000 would be deducted from your earnings to determine taxable income and then your total tax. In 2021, your taxable income and total tax is calculated then your portion of the Child Tax Credit, $1,500(because you received Advance Child Tax Credit payments of $1,500 in 2021), is deducted from the total tax.
On your cross-check, 2020 would have no change in tax after credits and 2021 would see taxes reduced by $1,500 on that line.
It is a good idea to cross-check, but a number of nonrefundable credits in 2020 became refundable in 2021. This means your tax is figured on an amount that had credits taken from it in 2020, but those credits are deducted from the tax you owe in 2021.
For example, let's assume you qualify for the full Child Tax Credit in both years. In 2020 $2,000 would be deducted from your earnings to determine taxable income and then your total tax. In 2021, your taxable income and total tax is calculated then your portion of the Child Tax Credit, $1,500(because you received Advance Child Tax Credit payments of $1,500 in 2021), is deducted from the total tax.
On your cross-check, 2020 would have no change in tax after credits and 2021 would see taxes reduced by $1,500 on that line.