The expanded child tax credit that was a great relief to parents last year has undergone a modification. The 2023 child tax credits have a lot of changes.
Read further, to know what the changes are and how it is going to have an impact on the parents’ community of the United States of America.
The Chief Tax Information Officer, at America’s second-largest tax preparation services company, Jackson-Hewitt, Mark Steber said that many of the government sites have the practice of keeping live the old tax information and data for those who want to catch up with their taxes.
He continued that toward the end of the previous year, there was an expectation that the expansion of the cold tax credit would be continued.
The American Rescue Plan, however, in its announcement did not expand the child tax credits for the year 2023.
Steber said that the decision was surprising and a discontinuity could be found on some of the government sites as well in the display of the tax data.
What Is The Child Tax Credit: 2023 Amount?
The child tax credit amounts benefits have returned to its previous amounts before the expansion was introduced.
As of 2023, the benefit for each child in a household is a maximum amount of 2,000 US dollars, only if the child has not turned 18 as of Dec 31, 2022.
Previously, in the 2021 tax year, the expansion in the child tax credit had boosted the amount to 3,600 US Dollars for any child under 5 and 3,000 US Dollars for any child from the age of 6 to under the age of 17.
The expansion has also added another benefit of extending the maximum beneficiary age limit to 18. The 2023 Child Tax Credit has a nonrefundable status, contrary to that of the last year.
How To Qualify For Child Tax Credit?
There are certain mandatory requirements that one has to meet in order to qualify for the tax break for the tax year 2022.
The criteria can be listed as:
- One should have a MAGI, that is the Modified Adjusted Gross Income of
- 200,000 US Dollars
- less than 200,000 US Dollars
- In case of filling out a joint form, one should have a MAGI of
- 400,000 US Dollars
- less than 400,000 US Dollars
- The child who will get the benefit of the program should satisfy the age requirements:
- should be of ages from birth upto 17 years
- should be under 17 years on December 31, 2022
- The beneficiary child should have a valid Social Security number
- The relationship that the benfiacari child shares with the applicant should be that of
- a legal child
- a stepchild
- a foster child
- a sibling
- a half-brother
- a half-sister
- a grandchild
- a niece
- a nephew
- or a descendant in of any these categories
- The beneficiary child should not have contributed more than half of the child’s own financial support during the specific tax year.
- The beneficiary child should have lived with the applicant for more than six months.
- The applicant should be claiming the beneficiary child as a dependant on the former’s tax return.
- The applicant should not have filed a joint return with their spouse for the tax year.
- The applicant should have only filed the joint return in the cases
- to claim a refund of the withheld income tax
- to claim a refund of the estimated tax paid
Child Tax Credit 2023: Residential Requirements:
One has to meet specific residential requirements:
- The applicant should be a citizen of the nation of America
- The applicant should be a resident alien in the USA
- The applicant should be a national of the United States of America
How To Claim Child Tax Credit?
To claim the Child Tax Credit in 2023 one has to fill out Form 1040. The details of the eligible children should be added to the form.
After filling out the form, the next thing one has to do is to attach a finished Schedule 8812
A finished Credit for Qualifying Children and other dependents.
Also Read: Suze Orman: The Personal Finance Expert Telling The Hard Truths
What To Do
If The Credit Is Beyond What You Owe In Taxes?
The 2023 Child Tax Credits no longer have the refundable status as that of the last year.
This means that if the tax liability of the applicant is more than what he/she/they get from the credit, the difference would not be credited.
Even in the case of the credit being more than what one owes in taxes, one has the eligibility to claim for additional child tax credit. This claim can have a refund benefit of a maximum of 1,500 US dollars for each child.
One who has paid for the child care can also claim eligibility for the child and dependent care credit. The childcare expenses between 20 percent to 35 percent could be declared by the applicant, the percentage would be determined under different criteria.
In order to be viewed as eligible for the credit one should have some earned income and the received care should not have been provided by a spouse or any other family member.
- One can get benefits of up to 3,000 US Dollars
- for one child aged under 13.
- for one dependent with disabilities.
- One can get the benefit of up to 6,000 US Dollars
- for two children aged under 13.
- for more than two children aged under 13.
Families in the United States can also avail of other federal income tax breaks, such as adoption credits, earned income tax credits, and education credits.
What Is A State Child Tax Credit?
Some of the states have introduced and implemented child tax credits. Such state-aided child tax credits are supposed to support families that raise one or more children.
The states that have an active child tax credit program are
- California
- Connecticut
- Colorado
- Idaho
- Maryland
- Maine
- Massachusetts
- New Jersey
- New York
- New Mexico
- Oklahoma
- Vermont
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