The Child Tax Credit (CTC) is a federal tax benefit that provides considerable financial support to American taxpayers with dependent children. Most taxpayers with children under the age of 17 are eligible to claim a credit of up to $2,000 on their tax return.
However, when you file your taxes, you can only include information for that specific tax year. When you file a 2022 individual income tax return, you can only enter pertinent information on income, children, marriage and other information pertinent to 2022.
So, if you have been blessed with a child born this year, you will need to wait until 2024 to take advantage of the tax credit (when you file your 2023 tax return).
That doesn’t mean you shouldn’t know the criteria and qualifications required by the Internal Revenue Service (IRS) to claim the CTC, particularly if your 2023 income tax filing will be the first year you include a dependent and claim the credit.
According to the IRS, you may claim a CTC for any qualifying child who has a Social Security number. When it comes time to file your 2023 taxes, bear in mind that to qualify for the full Child Tax Credit amount, each dependent must:
- Be under age 17 at the end of the year
- Be your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister or a descendant of one of these (for example, a grandchild, niece or nephew)
- Provide no more than half of their own financial support during the year
- Have lived with you for more than half the year
- Be properly claimed as your dependent on your tax return
- Not file a joint return with their spouse for the tax year or file it only to claim a refund of withheld income tax or estimated tax paid
- Have been a U.S. citizen, U.S. national or U.S. resident alien
In addition to the eligibility conditions above, the Child Tax Credit is also based on earned income. The IRS imposes an income threshold lower limit of $200,000 (individual and other filing status’) and $400,000 (joint return) for CTC-qualifying taxpayers.
Parents and guardians with higher incomes may be eligible to claim a partial credit. The credit amount is reduced or phased-out by $50 for each $1,000 of income above the income threshold and no credit is claimable beyond $240,000 (individual and other filing status’) and $480,000 (joint return).
If your Child Tax Credit is greater than the total amount of income taxes you owe (as long as you had an earned income of at least $2,500), the CTC is partially refundable too. For the 2022 tax year (taxes filed in 2023), the refundable part is worth up to $1,500 for each qualifying child. For the 2023 tax year (taxes filed in 2024), the maximum child tax credit will remain $2,000 per qualifying dependent, but the partially refundable payment will increase up to $1,600, per the IRS.
To claim the CTC, you must enter eligible children and dependents on your U.S. Individual Income Tax Return Form 1040 and attach a completed Schedule 8812 (Credits for Qualifying Children and Other Dependents).
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