It’s tax season, and confusion can easily creep in amidst the pile of forms and applications. Here are details to simplify the filing process for your child tax credit.
Filing taxes as a parent or guardian can be more complicated than just filing your tax return or filing jointly with a spouse. The updated CTC might make you eligible for various new tax credits and deductions depending on your income.
Here’s what you need to understand about this year’s CTC and whether you meet its qualifications for the upcoming tax season.
Per Child Tax Credit
In 2023, the maximum tax credit per eligible child is $2,000 for children under 17. For the refundable part of the credit, also known as the additional child tax credit, you could get up to $1,600 for every qualified child.
Under CTC, for someone to be considered a “child,” they must fulfill these criteria:
- They are a U.S. citizen, resident, or national.
- They are your daughter, son, stepchild, eligible foster child, or sibling (including step/half/related descendants like a niece, nephew, or grandchild).
- They have lived with you for more than half of the tax year.
- They need to be under 17 years old at year-end.
- They provide less than half of their financial support during the tax year.
- They rightfully claim to be your dependent on your tax return.
- They’re not filing a joint return with their spouse unless solely for claiming a withheld or estimated tax refund.
Starting from the tax year 2018 until 2025, you might also qualify to claim the Other Dependent Credit (ODC). It’s a nonrefundable credit for each eligible dependent who doesn’t meet the criteria under the CTC
Who Is Eligible for the Child Tax Credit?
The CTC offers a tax break to families with eligible children. To qualify, you must first be a parent or guardian filing taxes in 2024. You can claim the CTC for each qualifying child possessing a valid Social Security number for work in the United States.
If you meet all eligibility requirements and your yearly income is $200,000 or less (or $400,000 for joint filers), you’re entitled to the 2022 Child Tax Credit for each qualifying child. However, parents or guardians with higher incomes might still be able to claim a partial credit.
The value of both the child tax credit and the additional tax credit reduces when the parent or guardian’s gross income exceeds $200,000 or $400,000 when filing jointly with a spouse.
However, those who file Form 2555 or Form 2555-EZ, which exclude foreign earned income, are not eligible for the additional tax credit.
What’s the Process for Claiming the Child Tax Credit?
To claim tax relief under CTC, you must list your children and dependents on Form 1040, the U.S. individual income tax return.
You must only use Schedule 1 of Form 1040 if you have additional income sources, like unemployment compensation, prize or award money, or gambling winnings. You must use Schedule 2 if you owe other taxes, like self-employment, household employment, and additional IRA taxes.
Additionally, you must fill out Schedule 8812, which deals with credits for qualifying children and other dependents. This form will help you calculate your child tax credits, report the advance child tax credit payments received in the previous year, and determine any additional tax owed if you received excessive advance CTC payments.