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Common questions about the Child Tax Credit and 8812 in ProSeries

by Intuit•10• Updated 4 months ago

ProSeries will automatically compute the Child Tax Credit (CTC) and additional child tax credit based on your entries throughout the return. See the Form 1040, line 19 instruction tip and IRS Pub. 972 for more information and who qualifies for the credit. If you are working on a 2020 or 2021 return see the special instructions below.

Why isn't the Child Tax Credit calculating?

If the Child Tax Credit isn't calculating, you may be missing required information on the return. Follow these steps to resolve:

  1. Open the Federal Information Worksheet.
  2. Scroll down to Part 1 - Personal Information.
  3. Make sure a Social Security number and Date of birth is entered for the taxpayer/spouse.
  4. Scroll down to Part III - Dependent/Earned Income Credit/Child and Dependent Care Credit Information.
  5. Make sure a Social Security number and Date of birth is entered for the dependent(s).
    • ITIN and ATIN are no longer allowed for the Child Tax Credit.
  6. Make sure the checkboxes labeled Not qual for child tax credit OR non U.S. or Not qual credit other dep aren't marked.
  7. Review the Child Tax Credit and Credit for Other Dependents Worksheet to see whether they qualify for the credit.

For all returns except tax year 2021, the Child Tax Credit is nonrefundable. The return must have taxable income for the credit to be calculated.

2021 returns: Entering advance child tax credit payments from Letter 6419

ProSeries will generate a final review error on the 8812 for all Individual tax returns, even if there are no current dependents. If the taxpayer/spouse received advance child tax credit payments for dependents not currently on the tax return and those payments are not entered this can cause a delay in receiving the tax refund for 2021.

  1. The taxpayer should receive letter 6419 showing how much advance child tax credit payments they received.
  2. Open the Schedule 8812.
    1. Press F6 to bring up Open Forms.
    2. Type in 8812 and press Enter.
  3. Scroll down to the Principal Place of Abode and Letter 6419 Information Smart Worksheet.
  4. Enter the information for the tax return.
  5. If the taxpayer/spouse did not receive any advance child tax credit payments complete question A1 and A2 and enter 0 for B1 and B2 to clear the Final Review errors.

For tax year 2020 returns, your client may elect to use their 2019 earned income to figure this credit if their earnings were greater in 2019 than in 2020. To make this election:

  1. Complete the return (wages, dependents etc) as you normally would.
  2. Open the 8812.
  3. Scroll down to the Prior Year Earned Income Election Smart Worksheet below line 5.
  4. Check the Yes box on line A.
    PCG_PS_8812.png

Make sure to check the return with and without this election to compare which option is more advantageous to your client. Since the additional Child Tax Credit calculation is so complex, electing to use prior year earned income may have no effect on the credit amount, or could even lower the allowed credit.

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