Child Tax Credit 2022 vs 2023: Changes in Maximum Credit Amount and Eligibility

Child Tax Credit 2022 vs 2023: With the child tax credit, you might potentially receive a refund on your federal tax return by applying a credit to your income taxes for a qualifying kid or children. It’s a rather simple tax relief.

In recent years, the credit’s worth has changed. We’ll go over the maximum credit amount for the 2023 tax year, the requirements for eligibility, and additional tax credits that can help families with moderate or low incomes.

One of the most significant components of welfare in the United States of America is the Child Tax Credit (CTC), which lowers tax liabilities for qualified parents and caregivers and may even result in tax refunds.

However, not everyone is qualified to claim the credit, and the amount of credit varies depending on who qualifies for assistance.

What is the Child Tax Credit 2023 tax year credit amount?

Let’s talk about actual monetary sums. The maximum amount is $2,000 for each qualified child, of which $1,600 is the refundable portion.

Based on your filing status and modified adjusted gross income, you may or may not receive the full credit amount. The various filers’ income thresholds are as follows:

$400,000 if a married couple files jointly.

Child Tax Credit 2024 Eligibility: Important Information and Guidance

$200,000 for qualifying widow(er) with dependent, married filing separately, single, head of household, and

Your entire credit will be lowered by $50 for each $1,000 you made in the tax year that exceeds the threshold if your income is more than that amount.

To whom is the child tax credit applicable?

The IRS looks at the following factors to decide if you qualify to claim a child tax credit on your tax return.

Dependent’s age and status

By the conclusion of the tax year that you are filing for, the child you are claiming as a dependant must not have turned 17 years old. Additionally, unless the eligible dependant is attempting to recoup estimated taxes paid or withheld income taxes, they must not have filed a combined tax return.

Connection and assistance

Your son or daughter, foster kid, stepchild, brother or sister, step-sibling, grandchild, nephew, or niece must be the qualifying child. They had to have supported you with no more than half of their own income during the tax year and have lived with you for more than half of it.

Nationality

Last but not least, for the child you want to claim as a dependent to be qualified for employment and to be considered a citizen or national of the United States, they must have a valid Social Security number.

2023 vs 2022 child tax credit

You might be wondering about the changes in the tax benefit if you claimed a dependant last year. In a nutshell, the answer is no. For 2023 taxes, the income thresholds and the tax credit amount are still the same as they were in 2022.

Pandemic legislation temporarily raised the credit to $3,000 to $3,600 per kid in 2021, depending on the child’s age. The higher quantities are no longer in effect.

It is noteworthy that Congress has once more suggested raising the extra child tax credit, or the refundable element of the credit, to $2,000 by 2025. This bill would apply to the 2023 child tax credit and enhance the credit’s refundable value from $1,600 to $1,800. It does this by progressively increasing the credit.

What distinguishes the dependent care credit from the child tax credit?

Despite their similar names, the dependent care credit and the child tax credit are two distinct tax credits. The IRS established the dependent care tax credit to assist working parents and caregivers who have a spouse or other loved one who is impaired with their childcare costs for young children (under 13).

Depending on your filing status, this credit may reimburse up to $6,000 for eligible expenses, so it’s important to be sure you and your dependent fit the requirements.

The IRS advice on child and dependent care expenses is available here.

The child tax credit can be claimed in three steps in 2023

If you file your tax return before the deadline, it should be quite simple to claim a child tax credit with the IRS once you’ve established that you meet the requirements.

Child Tax Credit Phase Out Amount: What You Need to Know

1. Complete Form 1040, adding children and additional dependents

The U.S. individual income tax return form, Form 1040, has a section where you are required to name your children and any other eligible dependents. You’ll enter this data through a series of questions if you’re using tax software or the IRS free tax filing service.

2. Finish the Schedule 8812

You can accurately calculate your child tax credits with the aid of this IRS worksheet. However, to finish the schedule, calculate a precise amount, and find out if you qualify for the additional child tax credit, you’ll need the information from the 1040 form.

3. If your claim for CTC was rejected

The IRS does not deliver the child tax credit refund until mid-February, so keep that in mind if you file early. However, if you qualify, the refund ought to be direct-deposited into your account as soon as February 27.

Refused? To find out why, you can inquire further with the IRS. Before resubmitting, you could be required to complete Schedule 8862, which applies to the earned income credit as well, if you need to make corrections to your claim.