Question

Why are we not getting the child tax credit?

Forum|Forum|1 year ago
April 4, 2025
2 replies
0 views

My spouse and I are self employee. He is an Uber driver and I am a braider. We have 4 children ( 2, 6, 10, and 18 years old). When we entered our income and expenses , we owe $500 to Federal but are getting a refund from our State. What I don't understand , is why we owe if taxable income is zero?

Also why are we only getting $1249 in Child and other dependent tax credits?

How can we get the full credit for our children?

Thank you for you help

TurboTax Premier Online

N

NCPERSON1

@dc285875 the child tax credit is dependent on your income.

The child tax credit is the LESSER of $2000 per child or Line 18 of your tax return. (look at Line 19 for the result)

The additional child tax credit is the LESSER of these three statements:

1) $1700 per child

2) 15% of the EARNED income that exceeds $2500

3) $2000 per child less the child tax credit calculated above.

Further, you are also paying self-employment tax, which is really Medicare and Social Security Tax. That is on Line 23.

does that help?

D

dc285875Author

Thank you for your answer.

All this terms are confusing for me.

Taxable income 0 but we end up with Tax liability?

But as you said it is due to our self employment income.

KrisD15

Yes.

When you are a W-2 employee, your employer withholds FICA Tax (Social Security tax) from your pay. The employer also pays a portion and sends it all in quarterly for the employee.

When you are self-employed, you are responsible to make that payment yourself, and that is done on your federal tax return.

This is called "Self-Employment Tax" but it is the same as FICA Tax.

This is charged after credits on your tax return, because credits can't offset this tax like they can your income tax liability.

This tax is to fund your Social Security Account, so it is handled differently, but still included in your final tax due on your federal return.

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V

Vanessa A

There could be a few reasons.

1. What you owe is probably self-employment taxes not income tax. So if you have self employment income of $20,000 and you are married filing jointly, you have SE taxes of $3,060, but you would not have any tax liability for ordinary income taxes because your taxable income after your standard deduction would be $0.

2. If your tax on line 16 of your 1040 is $0, then you would not be eligible for the child tax credit as that is a non-refundable credit which means it will reduce your taxes to $0 but not below.

If you are not eligible for the Child Tax Credit, it is possible to get the Additional Child Tax Credit which is limited to 15% of your earned income over $2,500. So if your earned income is $12,500, the credit would be limited to $1,500.

Basically, Your credit is likely limited due to your income, but since self-employment taxes are calculated separately, you will still have to pay them.

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