Why am I not getting a refund from the other dependent tax credit while claiming my sister?

Wait, so basically the other dependent credit only matters if you owe taxes at the end? What if I adjusted my W-4 to withhold less during the year? Would I then benefit from the ODC since I'd owe more at filing time?

Yes, that's exactly right! The ODC only helps if you have tax liability to reduce. If you adjusted your W-4 to withhold less throughout the year, you would potentially owe more at tax time, and then the ODC could be applied against that amount. However, that strategy needs careful consideration. While it might let you benefit from the ODC, reducing your withholding too much could potentially result in an underpayment penalty if you don't withhold enough throughout the year. It's about finding the right balance based on your specific tax situation.

Does this actually work for figuring out how to maximize credits? My situation is kind of similar but I'm claiming my mom as a dependent. The tax software is confusing me about which credits I'm getting and why.

I'm skeptical about these random tax tools. How is this any different from using TurboTax or H&R Block? Those already tell you which credits you qualify for and they're established companies.

It absolutely works for optimizing credits! It doesn't just tell you what you qualify for like regular software - it explains WHY certain credits aren't increasing your refund and what you could potentially do differently. For example, it showed me how adjusting my withholding could help me benefit from non-refundable credits like the ODC. The difference from regular tax software is that it's more like having a tax professional explain everything in plain language. It gives you the reasoning behind the calculations rather than just the final numbers. I found it much more transparent than TurboTax, which just gave me a final refund number without explaining why certain credits weren't adding more to my refund.

How does this actually work? Do they just keep calling the IRS for you or something? Seems like it would be against some kind of rule.

Sounds like a scam to me. Why would anyone need a service to call the IRS? Just keep calling yourself and eventually you'll get through. I've never had issues reaching them if I call first thing in the morning.

They use an automated system that navigates the IRS phone tree and holds your place in line. When an agent is about to pick up, their system calls you and connects you directly with the IRS agent. It's completely legitimate - they don't pretend to be you or anything questionable. I tried calling first thing in the morning for three days straight and couldn't get through. The IRS phone system would just say they were experiencing high call volume and hang up on me. Maybe you've been lucky, but during tax season especially, millions of people are trying to call simultaneously. The service just ensures you don't have to waste hours listening to hold music or getting hung up on repeatedly.

Thanks for bringing that up! Yes, my brother has lived with me full-time for the entire year. I have legal custody and provide over half of his financial support. He's still in high school even though he turned 18, so he meets the qualifying relative tests. I confirmed all the requirements before claiming him. It's just the credit refund part that was confusing me.

Sounds like you've done your homework! Just wanted to make sure because sometimes people don't realize all the specific requirements. Since your brother lives with you full-time and you provide most of his support while having legal custody, you're definitely filing correctly as HOH with him as a dependent. The ODC is still frustrating though. I had a similar situation with my mom living with me last year. What I did was adjust my W-4 at work to withhold a bit less each paycheck throughout the year, which meant I had a small tax liability when filing. Then the ODC actually helped reduce what I owed instead of just disappearing.

So what's the point of the Other Dependent Credit if most low income people don't owe taxes anyway? Seems like it mainly benefits higher income folks.