 Income tax 2021-2022, child tax credit parts 2A, 2B and 2C, filers who do not check a box on line 13 additional child tax credits. Get ready to get refunds to the max, dive it into income tax 2021-2022. Most of this information can be found on the Schedule 8812 tax year 2021 instructions IRS website irs.gov irs.gov. Income tax formula, we're down here in the credit area noting that credits and deductions are typically good but a dollar worth of credit is typically better than a dollar worth of deduction because you'll generally get the full dollar worth of benefit on the credit as opposed to the deduction up top which will be decreasing the taxable income upon which the tax will then be calculated. Also note there's two main categories, we can put the credits into non-refundable credits and refundable credits. Non-refundable credits basically don't bring the tax liability below zero whereas the refundable credits can and at that point it's no longer a refund it would be basically like a benefit program at that point in time some credits having a non-refundable and refundable component to them. Looking at the second page of the form 1040 line 19 non-refundable child tax credit or credit for for other dependents schedule 8812 line 28 refundable child tax credit or additional child tax credit from schedule 8812. We're looking at parts 2A, 2B and 2C filers to do not check a box online 13 for the additional child tax credits. Let's just kind of recap that real quick. So if we looked at the form here the schedule 8812 credits for qualifying children and other dependents and we scroll on here to line 13 check all the boxes that apply to you A. Check here if you or your spouse if married filing jointly had a principal place of abode in the United States for more than half of 2021 B. Check here if you or your spouse if married filing jointly were a bona fide resident of Puerto Rico. And if we don't check either of those if neither of those apply that's when we're basically skipping over here to part number C to calculate the credit amount. And then we have that breakout component between the amount that's going to be kind of like refundable and non-refundable and this is similar to what we've seen in prior tax years. So so it's a similar to that it might go back to this basically in following tax years as well where we got this kind of refundable and non-refundable component. So we're looking at part two A additional child tax credit down here part two B certain filers who have three or more children and then part two C additional child tax credit. Okay. So we have only complete parts two A to B and to see if you are completing part one C and you meet the following one you are not filing form 2555 to line for a is more than zero and three line 12 is more than line 15A. So line 18A if you have net earnings from self-employment and you use either optional method to figure those net earnings use the earned income worksheet later to figure the amount to enter in line 18A. So if we look at the forms we're looking at line 18A and part two A here we've got the earned income earned income can be a little bit more confusing when you have you know less standard kinds of income than like W2 income possibly then income from like a business like a Schedule C sole proprietorship for example. So here for example I brought the income down. So if I look at the form 1040 we got W2 income in this case with the one dependent 30,000 and then if I go into the form 8,812 we're looking at page number two part A and so now we've got our income which is the earned income for the 30,000. So usually straightforward but can be a little bit more confusing when there's other types of incomes otherwise all other taxpayers can use earned income chart later to figure the amount to enter online 18A obviously tax software is helpful to line 18B enter online 18B the total amount of non taxable combat pay that you and your spouse if you're filing jointly received in 2021. So combat pay if you're a member of the military then there's always there's all kinds of kind of special circumstances and rules that's kind of a specialized area that you got to make sure that you're picking up and or using software or working with a tax professional that is aware of those kind of differences in the code often times from members of the military. These amounts should be shown on form W2 box 12 with code Q line 21. If you are completing part 2B and your employer withheld or you paid additional Medicare tax or tier one RRTA tax I use the additional Medicare tax and RRTA tax worksheet to figure the amount entered online 21 again that would be more of an unusual type of situation part number three additional tax do not use part three if you and your spouse of filing jointly did not receive any advanced child tax credit payments for 2021 only use part three if you enter zero online 14G or line 15F whichever applies if you or your spouse if filing jointly didn't receive advanced child tax credit payments for 2021 or you received these payments but line 14G and line 15F whichever applies is more than zero then you do not have then you do not have access advanced child access chat advanced child tax credit payments and you do not owe any additional tax. So if we look at part three this is the additional tax on basically part number three. If you had like additional tax for example where I've I've upped the amount of the credit of the advanced payments that we've gotten in order to basically see the population that would take into account here now this generally hopefully isn't the case for most taxpayers because you may not have gotten any advanced payments if you're in if you didn't check one of the boxes off online 13 and if you did hopefully that's less than the amount of the tax calculation so you shouldn't have anything then that you'd be reporting on part three in that event it would be the general idea as I interpret it. The total amount of advanced child tax credit payments that you received during 2021 was based on the IRS is estimate of the amount of the RCTC that's the recoverable the that's the refundable child tax credits so they tried to figure out the refundable amount and like I say if you were to have not checked off the two boxes in part three if you lived in basically the United States in general then it would be easy because the whole thing was the refundable part but if not if we're in this circumstance now you've back to the old kind of rules where they're trying to determine the refundable part and give you basically half of the refundable part which is more complex more likely that they might make errors in that case with that estimate due to that added level of complexity. So RCTC you may be eligible to claim on your 2001 so you may owe additional tax on those payments if the total amount of advanced child tax credit payments you received is greater than the child tax credit amount that you are eligible to claim on your 2021 tax return so just like normal you've got that if they if they messed up the estimate and they over estimated then we're going to be figuring that on part three hopefully that's not the case for most people. So for example if you received advanced child tax credit payments for three qualifying children properly claimed on your 2020 tax return but you claim one qualifying child on your 2021 tax return the advanced child tax credit payment that you received based on the three children may result in you having received excess advanced child tax credit payments and owe an additional tax to repay the excess however you may not owe the additional tax or you may owe a reduced tax amount if you qualify for repayment protection uh complete part three of schedule 8812 to determine if you owe additional tax or if you qualify for repayment protection so you got that that caveat of the repayment protection that might be applicable there so part number three continued additional tax repayment protection so what does that mean if you got if you got overpaid now they gave you the advanced payments greater than the credit amount and you would think you'd have to owe it back unless possibly you've got the repayment protection repayment protection is available to taxpayers whose advanced child tax credit payments uh took more qualifying children into account than the taxpayers claim on their 2021 tax return taxpayers subject to the repayment protection may owe no additional tax or have the additional tax amount reduced by the repayment protection amount the full repayment protection amount is two thousand dollars per child not claim on your tax return the amount of the repayment protection will be reduced or phased out uh based on your modified adjusted gross income example example number seven you properly claimed four qualifying children on your 2020 tax return so that's the one they made the estimate on that's last year but claim only one qualifying child on your 2021 tax return so now you would expect the iris completely messes up your prepayments because they're going to base it on four payments for the last year even though you only have one in the current year so you can be eligible for up to six thousand dollars in repayment protection that is two thousand for each excess qualifying child if you qualify based on your modified adjusted gross income you won't qualify for any repayment protection if you're modified agi on your 2021 tax return is at or above the amounts listed below so 120,000 if married filing jointly or qualified widow widow were 100,000 if head of household 80,000 if single or married filing separately so maybe the easiest way to see this is to say well let's say that last year I had one dependent and then this year I don't have any dependence and so the government gave me let's say 3600 in advance payments based on last year and I don't have any dependence this year well then you would expect that we'd have to pay back that 3600 or reduce or increase you know our liability or reduce the refund by it but we've got the 3600 you can see here and then we've got the 2000 that it's being adjusted by to get to the bottom line of the 1000 the 1600 this this is your advanced tax here so you've got that adjustment for it which is basically the repayment protection and then that amount flows into line 19 of schedule number two so schedule number two 19 here for the additional tax from the schedule 8812 we got the 1040 and then it's going to be on page two of the 1040 and those other tax line there line 30 enter the number of qualified children take it into account in determining the annual advanced amount you received in 2021 the number of qualified children is reported in box two letter 6419 do not enter the number of children claimed on your 2021 tax return on this line so they're basically saying how what was the information that we used to calculate it that we're showing on the letter which should be based on the prior year tax return 2020 so in this in that example in the example what we looked at over here we would say that online 30 online 30 we had one last year and zero in the current year and that's and that means that the iris made the estimate based on the wrong information that they had from the prior year so the number of children claim on 2021 tax return may be different than the number of qualified children reported on letter 6419 you must use the number of qualified children reported on letter 616419 to correctly account for any repayment protection amount when figuring your additional tax so to get access to that repayment protection you got to show that the iris kind of did that miscalculation by having the wrong dependent on the year they estimated on which was the prior year so married filing jointly if you are married filing jointly see the married filing jointly chart next to figure the amount to enter online 30 so if your 2020 tax return you filed as single married filing separately head of household or qualified widow widow were and in 2021 your tax return you file a married filing jointly add the number of the qualified children reported unboxed to of your letter 6419 and your spouse's letter 6419 so if on your 2020 tax return you filed as married filing jointly and on your 2021 tax return you file as married filing jointly with a different spouse than your 2020 tax return so now we got a bit more unusual situation add the number of the qualified children reported unboxed to of your letter 6419 and your spouse's letter 6419 and if in 2020 tax year you filed married filing jointly and on your 2021 tax return you file as married filing jointly with the same spouse from your 2020 tax return add the then online 30 add the number of qualified children reported in box two of your letter 6419 and your spouse's letter 6419 so it gets a little bit more confusing with these letters if and you're in a married situation and obviously if you change marital status in some way that can cause a little bit of confusion you might have to go to this little chart to understand that better so example eight the facts are the same as example four earlier roger and tiffany will add the number of qualified children reported in box two of their letters 6419 and enter three on line 30 example nine the facts are the same as in example five earlier john and susan filed as married filing jointly on their 2020 tax return and are filing together as married filing jointly on their 2021 tax return john and susan will add the numbers of qualified children reported in box two of their letters 6419 and divide the result by two john and susan will enter four online 34 plus four equals eight eight divided by two is four example 10 the facts are the same as example six earlier tony filed as married filing jointly on his 2020 tax return with ivy on his 2021 tax return tony is filing a married filing jointly with a different spouse jane interesting interesting dynamics going on here with them with tony tony and jane will add the number of qualified children reported in box two of their letters 6419 and enter four one plus three online 30 so if you've if you've got some like unusual kind of situations then you might you can take a look at some of these examples the iris hopefully has has imagined up most of the unusual situations and can give an example of them to guide people