Tax season can be stressful for most Americans, but staying informed about any changes that could affect your financial situation is essential. For tax returns filed in 2023, the tax credit for children may be worth up to $2,000 per qualifying dependent under 17, which is excellent news for parents. But what does that mean for you?
Firstly, let’s clarify who qualifies as a dependent. A qualifying dependent is a child under 17 who is related to you and lives with you for at least six months out of the year. Dependents could include your biological or adopted children, stepchildren, foster children, or siblings.
If you meet the qualifications, you may qualify for a child tax credit up to $2,000 per child. This credit is partially refundable, meaning that if your tax liability is less than $2,000, you may be eligible to receive a refund of up to $1,500.
It’s important to note that the credit amount begins to phase out for higher-income households. If your modified adjusted gross income exceeds $400,000 (for married couples filing jointly) or $200,000 (for all other filers), the credit amount will start decreasing. For example, if your income is $500,000 and you have two children, you would only be eligible for a child tax credit of $1,000 per child.
If you’re unsure about your eligibility or how much you could receive, consult a tax professional or use tax software that can help you calculate your credit amount.
The child tax credit can be a valuable financial resource for families with young children. By understanding the qualifications and limitations of the credit, you can make informed decisions about your taxes and potentially save money. File your taxes on time, including extensions, to take advantage of your eligible tax credits!