When tax season rolls around, most families hope to get a return on their taxes instead of owing money they didn’t plan for. There are many tax benefits for families to take advantage of to receive a deduction on their income. As parents, we do have the benefit of claiming our children as dependents and receiving something called the child tax credit, also known as the CTC.
The child tax credit is a tax benefit that allows you to claim your children as dependents to get a credit on your taxes. The American Rescue Plan in 2021 increased the amount each family receives per child, and provided advance monthly payments to families who qualified.
When it’s time to fill out your taxes, it’s important to ensure you’re receiving any benefit your family is eligible for. Let’s look at what the child tax credit is and how you can claim it on your taxes.
What is the Child Tax Credit (CTC)?
The Child Tax Credit is a tax benefit many families with children are able to receive. In 2021, the benefit per child increased from $2,000 per child to $3,000 for children over 6 and $3,600 for children under 6 years old. Many families were also able to receive advance payments of $250 to $300 per month for each child in their care.
Even though the advance monthly payments and increased benefits didn't continue into 2022, you can still claim the CTC for your family at the previous amount of $2,000 per child or eligible dependent.
Who is Eligible for the Child Tax Credit?
If you’re unsure of who you can claim the Child Tax Credit for in your family, a child or dependent has to meet the following qualifications:
- Under 18 by the end of the year
- Son, daughter, step-child, eligible foster child, or another child under 18 you are financially supporting
- Has a valid Social Security number
- Lived with you for more than half the year
- U.S. citizen or U.S. resident alien
If you’re still unsure if your children or other dependents qualify, the IRS has a free tool that can help determine their eligibility.
As far as your family’s income, you qualify for the full Child Tax Credit if your income is under:
- $150,000 if you are married and filing jointly with your spouse
- $112,500 if you are filing as head of household
- $75,000 if you’re a single filer or married filing separately
If you don’t meet any of these qualifications, you may still be eligible for another benefit for your children, such as the Credit for Other Dependents.
Can You Claim a Child Before They’re Born?
If you’re pregnant while filing your taxes or just had a baby, you may wonder if you’re eligible to claim your child before they’re born. Since a qualifying child requires a valid Social Security number, they don’t count as a dependent on your taxes until after they’re born. If your child is born on or before December 31st, you’re able to claim them for that year.
How Do You Claim the Child Tax Credit?
If your family is eligible to receive the Child Tax Credit, you can claim it on Form 1040 by attaching the Schedule 8812 form, titled Credits for Qualifying Children and Other Dependents. This form will ask you for information about your income and the number of qualifying dependents.
When you’re filling out your taxes, be sure to check for all eligible benefits. If your family qualifies for the CTC, you may also qualify for other family benefits such as the Child and Dependent Care Credit or the Earned Income Tax Credit.
How Much Money Do You Get With the Tax Credit?
After 2021, the benefit of increasing the Child Tax Credit and advance monthly payments ended, but you can still claim the credit on your taxes this year. For those filing taxes in 2023, the Child Tax Credit will be $2,000 per dependent.
The amount per dependent is a credit on your taxes, so how much you will actually receive depends on the individual income and circumstances of your family. A tax credit is a deduction of your income, often leading to a higher return. For example, if you have two dependents that qualify, you would receive a $4000 deduction off your income when you file your taxes.
Filing taxes can be complicated, especially when you’re trying to ensure you take advantage of any available benefit for your family. When it comes to claiming the Child Tax Credit, you can claim the benefit by filling out the proper tax form and providing information about each dependent.
Although the Earned Income Tax Credit is only refundable for up to three dependents, you can claim the Child Tax Credit for all your eligible children. You may consider consulting with a tax professional if you're unsure which benefits you're eligible to receive. Otherwise, all tax forms and rules for eligibility are available through the IRS website.
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