The child tax credit (CTC) is a credit that, if a parent qualifies, decreases the amount of federal taxes that a parent may owe to the IRS. Taxpayers can take advantage of this if they have dependent children under 17 years of age. Depending on how much the credit reduces your tax bill—typically on a dollar-per-dollar basis—you may find that you have no tax bill left after the CTC does its work. You must fit into a certain tax bracket to be deemed eligible for the CTC.
Did you receive the child tax credit in 2023? If so, you may be wondering if you will continue receiving it in 2024. You may also be asking if the child tax credit will phase out in the next tax year. A child tax credit update can be confusing, so it is worthwhile for you to do some research to learn if you can still benefit from it for another year. That’s why we’ve laid out some basics as a starting point for you!
How does child tax credit work?
The child tax credit is partially refundable so that you receive some of the credit, even if you don’t have income tax liabilities. It is based on your modified adjusted gross income, considering how many dependents under 17 you have in your care. You may be able to claim the child tax credit if you are a parent who files taxes, who has a child under the age of 17 and qualifies for the residency requirements and income limits.
Child tax credit update for 2023 tax returns
The child tax credit has remained mostly unchanged for the 2023 tax year. You may notice that you can get a refund of $1,600 during this tax year, instead of the previous $1,500.
How much is the child tax credit?
The 2023 child tax credit is worth up to $2,000 (which is the current tax year). From this total amount, $1,600 is refundable, depending on your income limits and residency requirements.
Who qualifies for child tax credit?
The Internal Revenue Service (IRS) has cut-and-dry guidelines about who qualifies to receive the child tax credit refund. According to the IRS, you’ll need to meet all these requirements to know if it’s worthwhile to apply for qualification:
- “Each dependent must be under age 17 at the end of the year.
- Each dependent must legally be your dependent according to these standards: Son, daughter, brother, sister, stepchild, stepbrother, stepsister, half-brother, half-sister, eligible foster child, or descendent of one of these.
- Each dependent must have lived with you for more than half of the year and cannot provide more than half of their own financial support during the year.
- Each dependent must have been a U.S. citizen, U.S. resident alien or U.S. national during the relevant tax year.
- Each dependent, if married, must not file a joint return with their spouse for the relevant tax year.
- You must remember to file each qualifying dependent on your tax return.” (IRS, n.d.).
Reference List: Internal Revenue Service. (n.d.). Child Tax Credit. Retrieved from https://www.irs.gov/credits-deductions/individuals/child-tax-credit
Who qualifies for the additional child tax credit?
Additional child tax credit helps working parents with low to moderate incomes. If you earn a minimum wage of $2,500, you may be able to claim additional child tax credit. Bear in mind that your income must not come from Social Security, child support, pensions, interests, or dividends, or else your income does not count as “earned” income. Your dependent must also have their own Social Security number (SSN) for you to qualify for additional child tax credit.
The additional child tax credit may allow you to receive up to $1,500 of the total $2,000 child tax credit per each dependent. Your Form 1040 will come with a child tax credit worksheet in the form of a Schedule 8812, which helps you figure out if you are eligible to claim the additional child tax credit.
How much tax credit do you get per child with ITIN?
An Individual Taxpayer Identification Number (ITIN) is an identification number assigned to people who do not qualify for a SSN. Most people with ITINs are individuals from foreign countries or dependents who can be claimed on tax returns but who do not qualify for SSNs.
You cannot claim the child tax credit for a child with an ITIN. Only dependents who have SSNs may be eligible for the child tax credit or additional child tax credit.
How do you claim the child tax credit?
Your federal tax return (Form 1040) will include a section where you can claim the child tax credit and/or additional child tax credit. Make sure you file your taxes by the deadline of April 15, 2024, or by the date set in your tax extension if you get one. Remember to use Schedule 8812 included in your Form 1040 to help determine if you qualify and how much child tax credit you can receive.
If you file early, don’t automatically expect to see your child tax credit refund until the IRS releases all refunds in mid-February or later. However, if you file early via direct deposit or submit a perfect, error-free tax return, you may see your refund within the usual three-week timeframe.
Taxes can be confusing at the best of times. If you are trying to claim child tax credit on top of everything else, you may not know where to start. That’s where LegalShield can help! When you become a LegalShield Member, you gain access to a dedicated law firm who responds in eight (8) business hours or less, offers consultation on an unlimited number of legal matters, can make a phone call or write a letter if it will further help resolve a legal matter, reviews up to 15 pages of legal documents, and can help in many other areas of civil law. Taxes don’t have to stress you out this year with LegalShield’s affordable access!
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