Common questions for Schedule 8812 in Lacerte

Below are answers to frequently asked questions about the Credits for Qualifying Children and Other Dependents, Schedule 8812.

For returns 2022 and beyond

• A child must be under age 17 at the end of 2022 to be considered a qualifying child.
• Enhanced credits for children under age 6 and under age 18 expired. The maximum credit can be up to $2,000 for each qualifying child.
• The Additional Child Tax Credit (ACTC) can be worth up to $1,600, depending on your income. You must have at least $2,500 in earned income to claim the credit.
• Bona-fide residents of Puerto Rico are no longer required to have three or more qualifying children in order to claim the ACTC.
• See the IRS instructions for Form 8812 for phase-out and calculation information.

How do I generate the 8812?

Lacerte will automatically generate Schedule 8812 to compute the additional child tax credit (CTC) 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. However, if you are working on a prior year tax return see the information below for that tax year:

How do I adjust the 8812 calculation?

1. Go to Screen 38.2 Recovery Rebate, EIC, Residential Energy, Other Credits.
2. Scroll down to the Child Tax Credits section.
3. Enter any adjustments needed in the fields labeled with an [A] here.

However, the IRS doesn't allow returns with overrides entered for these credits to be e-filed. This will also suppress Schedule 8812, as the program assumes that the form has been manually completed elsewhere and will be physically attached to the paper filed return.

For tax year 2021 only:

• The Child Tax Credit was expanded to apply to qualifying children who hadn't yet reached age 18 by the end of 2021.
• The initial amount of the Child Tax Credit was increased to $3,600 for each qualifying child under age 6 at the end of 2021 and $3,000 for each qualifying child under age 18 by the end of 2021.
• If you met certain residency requirements, the Child Tax Credit could be fully refundable, even if you received no income.
• See the IRS instructions for Form 8812 for phase-out and calculation information.

Advanced payments

From July 2021 to December 2021, taxpayers may have received an advance payment of the Child Tax Credit equal to 50% of the IRS estimate of the Child Tax Credit.

• If your client received advance Child Tax Credit payments during 2021 and the credits you figure using Schedule 8812 are less than what they received, your client may owe an additional tax.
• See Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return for details.

Entering advance child tax credit payments from Letter 6419 for tax year 2021

1. The taxpayer should receive letter 6419 showing how much advance child tax credit payments they received.
2. Go to Screen 38.2 EIC, Residential Energy, Other Credits.
3. Select Child Tax Credits from the Sections.
4. Enter the information for the tax return.

Lacerte will automatically generate Schedule 8812 to compute the additional child tax credit (CTC) based on your entries throughout the return. However, for tax year 2020, taxpayers may elect to use 2019 earned income amounts to figure the credit.

For tax year 2020: Elect to use prior year earned income

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. Go to Screen 38.2 Recovery Rebate, EIC, Residential Energy, Other Credits.
3. Scroll down to the 2019 Earned Income Election for EIC and/or Additional CTC subsection.
4. Enter a 1 or 3 in the field labeled Elect to use 2019 earned income and nontaxable combat pay for: 1=EIC and additional child tax credit, 2=EIC only, 3=additional child tax credit only.
5. Enter the amount of 2019 Earned income (not including nontaxable combat pay).
6. Enter any 2019 Nontaxable combat pay, if applicable.

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.