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2023 Income Tax Videos

CHILD TAX CREDIT TAX YEAR 2023

For tax year 2023 (taxes filed in 2024), the child tax credit remains at a maximum of $2,000 per child, the same as in 2022, but the refundable portion increases up to $1,600

What is the child tax credit?

The child tax credit (CTC) is a nonrefundable tax credit available to taxpayers with dependent children under the age of 17. The credit can reduce your tax bill on a dollar-for-dollar basis, potentially eliminating your tax bill altogether. Some taxpayers may also be eligible for a partial refund of the credit through what's called the “additional child tax credit" (ACTC).

To qualify, taxpayers and their children must meet certain eligibility criteria that take into account the child's age, as well as their relationship to the person claiming them.

Taxpayers must also meet income thresholds to take full advantage of the benefit because the credit phases out for high earners. Once your modified adjusted gross income exceeds the income limit, the credit amount you get may be smaller, or you may be deemed ineligible.

 

How much is the 2023 child tax credit?

For 2023, the child tax credit is worth $2,000 per qualifying dependent child if your modified adjusted gross income is $400,000 or below (married filing jointly) or $200,000 or below (all other filers). The refundable portion, also known as the additional child tax credit, is worth up to $1,600.

If your MAGI exceeds the above limits, your credit gets reduced by $50 for each $1,000 that your income exceeds the threshold.

Requirements: Who qualifies for the child tax credit?

Taxpayers can claim the child tax credit for the 2023 tax year when they file their tax returns in 2024. Generally, there are seven “tests” you and your qualifying child need to pass.

  1. Age: Your child must have been under the age of 17 at the end of 2023.

  2. Relationship: The child you’re claiming must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister or a descendant of any of those people (e.g., a grandchild, niece or nephew).

  3. Dependent status: You must be able to properly claim the child as a dependent. The child also cannot file a joint tax return, unless they file it to claim a refund of withheld income taxes or estimated taxes paid.

  4. Residency: The child you’re claiming must have lived with you for at least half the year (there are some exceptions to this rule).

  5. Financial support: You must have provided at least half of the child’s support during the last year. In other words, if your qualified child financially supported themselves for more than six months, they’re likely considered not qualified.

  6. Citizenship: Per the IRS, your child must be a "U.S. citizen, U.S. national or U.S. resident alien," and must hold a valid Social Security number.

  7. Income: Parents or caregivers claiming the credit also typically can’t exceed certain income requirements. Depending on how much your income exceeds that threshold, the credit gets incrementally reduced until it is eliminated.

Additional child tax credit

If you qualify for the CTC but can't take full advantage because you don't owe taxes or owe less than your credit amount, you may be able to get a partial refund by claiming the additional child tax credit.

To claim the ACTC, all of the above income and dependent criteria must be met, but there are also a few more rules:

  • You must either have an earned income of at least $2,500

or have three or more qualifying dependents. Earned income typically means money from jobs or self-employment. It does not include money from passive sources such as dividends, pensions, welfare or unemployment

  • .

  • You or your partner (if married filing jointly) cannot exclude foreign-earned income from your taxes by filing Form 2555 or Form 2555-EZ

  • .

The IRS figures your additional child tax credit amount by multiplying your earned income above $2,500 by 15%. You can claim that number or however much of the CTC credit you were entitled to but couldn’t fully use, whichever number is less. But keep in mind that the maximum refund you can get for the 2023 tax year is capped at $1,600 per qualifying dependent. This is up from $1,500 in 2022.

If you have three or more dependent children, the math can be more complex. See Schedule 8812 for more details.

How to claim the 2023 child tax credit

For tax year 2023, you can claim the child tax credit and the additional child tax credit on the federal tax return (Form 1040 or 1040-SR) that you file by April 15, 2024, or by October 2024, with a tax extension. You’ll also need to fill out Schedule 8812 (“Credits for Qualifying Children and Other Dependents”), which is submitted with your 1040. This schedule will help you to figure out your child tax credit amount and how much of the partial refund you may be able to claim if applicable.

          

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