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Due to lost SSN mail I was unable to claim full child tax credit on my original 2018 and 2019 tax returns. So I was getting $500 child tax credit instead of $2000.

After finally learning the SSN for the child, I've filed form 1040-X to amend my tax returns. The change is very simple - Child tax credit increases by $1500 (from $500 to $2000) and so the refund increases by the same amount ($1500).

Recently I've received mail and checks from IRS. For some reason they amended each of my returns by $1207.00 instead of $1500 (plus interest, which was different for different years). There was no explanation regarding why the number is different.

What could be the reason the IRS has amended my tax return by $1207 instead of $1500?

Update: I've just noticed the "896 Overpayment credit offset" for $293 shown for older dates (before I've filed the amended tax returns). I bet it's what's causing the difference. But what is it? And why apply it only to the amendment refund?

P.S. On IRS website, the return transcripts have not changed, but the account transcripts list the $1207 amendment.

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The IRS seems to think you owed the government some money, and took it out of your refund. This is allowed per the IRM, and is an effective tool for the government to collect its debts. You can read more details and how to check what exactly the debt was here.

Further reading of the IRM shows this:

TC 896, computer-generated tax offset from IMF to BMF, Individual Retirement Account File (IRAF) or Shared Responsibility Payment (MFT 35) without an Agency/Sub-Agency (AG/SA) Code

I'm guessing you missed some ACA mandate requirements and owed some penalty. The IRS is not allowed to collect the penalty, but it most definitely is allowed to deduct it from refunds. So... seems like the government got lucky. If you didn't amend for more refund, they wouldn't be able to collect these amounts from you.

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  • Hmm. Interesting. I had health insurance every year. But maybe I did not tick some box somewhere. Or maybe there was another reason. Thank you for the tip.
    – Ark-kun
    Dec 22 '21 at 6:37

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