# Trying to understand difference between CTC and ACTC



## Alltimegreat1

Thanks to all for the help so far. I'm just about done with my 2015 return, but there are a few lingering problems.

I'm applying for an ITIN for my wife this year. On the SSN line can I write something like "ITIN application attached"?

Instead of the Additional Child Tax Credit of $1,000, it's showing me a refund of about $950, with $50 on the (non-refundable) normal Child Tax Credit. I know it's only $50, but I'd still like to know why I'm not getting the full amount. I had some investment income in the US, but it was far below our exemption amount of $12,000. The rest of our income was earned in Germany. Any ideas?


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## BBCWatcher

Alltimegreat1 said:


> I'm applying for an ITIN for my wife this year. On the SSN line can I write something like "ITIN application attached"?


You should have that ITIN well before the filing deadline.



> Instead of the Additional Child Tax Credit of $1,000, it's showing me a refund of about $950, with $50 on the (non-refundable) normal Child Tax Credit..... Any ideas?


Are you starting to hit the income phase-out for your filing status? Or was your maximum Child Tax Credit $1000, but you had $50 of U.S. income tax liability to offset, and thus your total refund (free money) is $950?


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## Alltimegreat1

I was under the impression she can't apply for an ITIN until filing a tax return.
We were nowhere near the phaseout. We only had a combined $30,000 in income this year. The investment income/capital gains amount was less than our deduction of $12,000, so I don't see how there could be a tax liability.


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## BBCWatcher

Alltimegreat1 said:


> I was under the impression she can't apply for an ITIN until filing a tax return.


OK, I thought you or your spouse were applying because of an exception. In that case, you're correct. You attach the W-7 to your tax return.



> We were nowhere near the phaseout. We only had a combined $30,000 in income this year. The investment income/capital gains amount was less than our deduction of $12,000, so I don't see how there could be a tax liability.


What's your filing status?


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## Alltimegreat1

Married filing jointly.


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## BBCWatcher

What are you getting on Form 1040 line 47? Is that zero?


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## Alltimegreat1

No, it's around 30,000


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## BBCWatcher

OK, I'm confused.  Line 47 is the total amount of tax you would owe before credits (refundable and nonrefundable). It's at least quite hard to get up to $30K of tax owed on less than $42K of income.

Something may be off if you're actually getting that sort of number on line 47 with that sort of income.


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## Alltimegreat1

Sorry, I was looking at line 7 and not 47. Line 47 is $286, Line 48 is $227, and Line 52 is $59. Line 75 is $941. I was hoping for $1,000.


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## BBCWatcher

That all makes sense, then. You owe a small amount of U.S. tax before credits, and so the amount of free money you can get is reduced slightly.

Take a look at the Foreign Tax Credit calculation closely to see if you can pull it up. For example, in tax year 2014 did you have any excess Foreign Tax Credit that you could bring forward? Also take a look at the other lines leading up to that result. Did you miss any German income tax? Maybe tax withheld on your bank interest, for example?

But all in all, not bad! "Paying" negative $941 is pretty good deal, I'd say.


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## Alltimegreat1

This is the first year I'm doing the FTC, so I have no carryover. You're right - I should not complain about $941 in free money. And I am grateful. It's just that I'm irritated that I don't understand the calculation. Why does $59 go to the normal child tax credit? What does this even mean?


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## BBCWatcher

It means that without the Child Tax Credit you would owe a whopping $59 in U.S. income tax using this path and your current figures. (Double check them, of course.) So first the IRS zeroes out the U.S. tax you owe, then they give you the balance ($941) as free money (the Additional Child Tax Credit). The best you can do is $0 tax owed and $1000 per child, but for some reason you've ended up with a tiny amount of U.S. tax owed at the end, so that has to be zeroed out first.

This gets split across your tax form because that top part tells you to enter zero if you end up with a negative number, i.e. those tax credits are nonrefundable. Then you get to apply refundable tax credits, such as the Additional Child Tax Credit. But you already "spent" $59 to get to zero above, so $941 goes down below.


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