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Child Tax Credit Discrepancy

Forum|Forum|4 years ago
March 27, 2022
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Hi -

We entered the exact amounts of our Child Tax Credit letters in the TT forms ($2k). The interview screens showed us the correct total as entered by us as we completed the section. In the review / summary screens, however, an additional $200 shows up and we cannot figure out where it is coming from - it does not appear in any data entry or interview screen question we can see.

We did also receive a similar amount in Economic Impact Payments though not exact - $206.64 total between the two of us and could not find a place to enter that - even with search? Based on reading other forums that appears to be because of an income exclusion. Counterintuitive to not at least show us we aren't eligible vs. just making it disappear.

Not sure if these two things are related but we appreciate any guidance. We don't want a discrepancy in our CTC letters vs submitted taxes to cause us a headache later.

Thanks!

Any ideas about

Tax Advice

Best answer by RaifH

It sounds like both your rebate recovery credit and child tax credits are being partially phased out or completely eliminated due to your income level. You get the rebate recovery credit if you did not receive the full amount of stimulus for the third payment between March and May of 2021. It is normally $1,400 per eligible member of your household. The amount you received was reported on Letter 6475 from the IRS. The amount starts to decrease at these income levels:

$150,000 if married and filing a joint return or if filing as a qualifying widow or widower
$112,500 if filing as head of household or
$75,000 for eligible individuals using any other filing statuses, such as single filers and married people filing separate returns.

You are not eligible for it at all if your income exceeded:

$160,000 if married and filing a joint return or if filing as a qualifying widow or widower
$120,000 if filing as head of household or
$80,000 for eligible individuals using other filing statuses, such as single filers and married people filing separate returns.

If you received a partial payment due to your gross income in 2020, and it turns out you were not eligible because your income increased in 2021, you do not have to pay it back or report it on your tax return.

The child tax credit on your return is calculated as amount of child tax credit you are eligible for minus amount of advanced child tax credit you already received. The amount you already received was reported by the IRS on Letter 6419. The amount you are eligible for phases out at two different income levels for your household. Your child tax credit starts at $3,600 for each child under 6 and $3,000 for children ages 6-17. It is reduced to $2,000 per child by $50 for each $1,000 your income is above:

150,000 if married and filing a joint return or if filing as a qualifying widow or widower;
$112,500 if filing as head of household; or
$75,000 if you are a single filer or are married and filing a separate return.

Your child tax credit is further reduced by $50 per $1,000 of your income if it exceeds:

$400,000 if married and filing a joint return; or
$200,000 for all other filing statuses.

It sounds like the IRS sent you $2,000 in advanced payments and TurboTax determined, based on the number and age of your children and your income level that you should have gotten $4,200 in child tax credit. Since you already received $2,000 the child tax credit on your return is the remainder of it, $2,200 which is reported on Line 28 of Form 1040. If you experimented by increasing the amount that you already received as advanced child tax credit payment, that would reduce the amount you would now claim on your tax return. The $4,200 of total child tax credit would remain the same.

KrisD15

You can look at your 1040.

Child Tax Credit is on Line 28

Recovery Rebate is on line 30

TO LOOK AT YOUR 1040 USING TURBOTAX ONLINE:

Click "Tax Tools" on the LEFT SIDE BAR then click "Tools" which shows open below

Click "View Tax Summary" on the screen

Click "Preview my 1040" which now appears on the LEFT SIDE BAR

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

A

alincolnAuthor

Thanks so much for taking the time to reply.

When I look at the 1040, the amount that shows up there is $2200. In the step by step screens it remains $2000. I cannot see what the calculation is that would account for this difference. I tried updating one of the step by step amounts to a larger number as a test and the discrepancy with the 1040 was even larger which tells me there may be some sort of intentional calculation operating behind the scenes? I'm accustomed to this kind of thing being far more clear in the UI. I would appreciate an explanation of this difference as re-assurance that this is not a bug in the software.

As far as the economic impact payments - which I assume to be the same thing as a "recovery rebate"? Nothing is showing up on the forms and I was not given an opportunity to enter the amounts we received on our letters. I read in another forum that this may be because we are ineligible so TurboTax doesn't give us this screenflow for it but I would have assumed this would be an income/reporting issue not an "additional credit" issue so I'm surprised by this too. Then again, I really don't understand the tax implications of these things. As above, would greatly appreciate an explanation of the decision tree here so that I can be assured I am not inadvertently underreporting. Would help if Turbo Tax made this more clear since it is a common situation this year.

Appreciate any additional insights on this. Thanks again for the response!

R

RaifHAnswer

It sounds like both your rebate recovery credit and child tax credits are being partially phased out or completely eliminated due to your income level. You get the rebate recovery credit if you did not receive the full amount of stimulus for the third payment between March and May of 2021. It is normally $1,400 per eligible member of your household. The amount you received was reported on Letter 6475 from the IRS. The amount starts to decrease at these income levels:

$150,000 if married and filing a joint return or if filing as a qualifying widow or widower
$112,500 if filing as head of household or
$75,000 for eligible individuals using any other filing statuses, such as single filers and married people filing separate returns.

You are not eligible for it at all if your income exceeded:

$160,000 if married and filing a joint return or if filing as a qualifying widow or widower
$120,000 if filing as head of household or
$80,000 for eligible individuals using other filing statuses, such as single filers and married people filing separate returns.

If you received a partial payment due to your gross income in 2020, and it turns out you were not eligible because your income increased in 2021, you do not have to pay it back or report it on your tax return.

The child tax credit on your return is calculated as amount of child tax credit you are eligible for minus amount of advanced child tax credit you already received. The amount you already received was reported by the IRS on Letter 6419. The amount you are eligible for phases out at two different income levels for your household. Your child tax credit starts at $3,600 for each child under 6 and $3,000 for children ages 6-17. It is reduced to $2,000 per child by $50 for each $1,000 your income is above:

150,000 if married and filing a joint return or if filing as a qualifying widow or widower;
$112,500 if filing as head of household; or
$75,000 if you are a single filer or are married and filing a separate return.

Your child tax credit is further reduced by $50 per $1,000 of your income if it exceeds:

$400,000 if married and filing a joint return; or
$200,000 for all other filing statuses.

It sounds like the IRS sent you $2,000 in advanced payments and TurboTax determined, based on the number and age of your children and your income level that you should have gotten $4,200 in child tax credit. Since you already received $2,000 the child tax credit on your return is the remainder of it, $2,200 which is reported on Line 28 of Form 1040. If you experimented by increasing the amount that you already received as advanced child tax credit payment, that would reduce the amount you would now claim on your tax return. The $4,200 of total child tax credit would remain the same.