Child Tax Credit Increase – Eligibility, Amount, Payment Method & How to claim

For the 2023 tax year (to be filed in 2024), the credit will be worth $2,000 per qualifying child, with $1,700 being potentially refundable through the additional child tax credit.

Child Tax Credit Increase

The CTC is a federal tax benefit that provides financial assistance to families raising children. For the 2024 tax year, the credit will be worth $2,000 per qualifying child, with $1,700 being potentially refundable through the additional child tax credit.

The credit was made fully refundable, and the credit’s scope has been expanded to allow 17-year-olds to qualify for the Child Tax Credit. Key Changes in the CTC for tax year 2023 (Taxes to be filed in 2024) are listed below.

  • The credit amount has increased to $2,000 per qualifying child.
  • The refundable portion of the credit, also known as the additional child tax credit, is worth up to $1,700.
  • The credit is available for children under the age of 18.

Eligibility for the CTC for tax year 2023 (Filed in 2024)

To be eligible for the Child Tax Credit, taxpayers must ensure that they and their qualifying child pass seven specific tests. These include:

  • Age: The child must have been under the age of 17 at the end of the tax year for which the credit is being claimed.
  • Relationship: The child must be a son, daughter, stepchild, foster child, brother, sister, half-brother, half-sister, stepbrother, step-sister, or a descendant of any of these individuals.
  • Citizenship: The child must be a U.S. citizen, U.S. national, or U.S. resident alien, and must hold a valid Social Security number.
  • Income: There are income limitations for claiming the credit. The phaseout of the credit begins with $200,000 in income ($400,000 for married filing jointly).
  • Support: The child must not have provided more than half of their own support for the year.
  • Dependent Status: The child must be claimed as a dependent on the taxpayer’s federal tax return.
  • Length of Residency: The child must have lived with the taxpayer for more than half of the tax year.

Child Tax Credit Increase

How to claim CTC for tax year 2023?

Claiming the Child Tax Credit involves different steps depending on whether you received advance payments or not:

If you received advance payments:

  • You don’t need to take any additional action to claim the remaining portion of the credit on your tax return.
  • The IRS will automatically factor in the advance payments you received when calculating your refund or tax owed.
  • However, review your Form 1040 and Schedule 8812 carefully to ensure the information about your dependents and income is accurate.

If you did not receive advance payments:

  • You can claim the full Child Tax Credit amount (up to $2,000 per qualifying child under 18, and up to $1,600 for children under 6) by filing a federal income tax return (Form 1040) with Schedule 8812 attached.
  • Make sure to provide all necessary information about your dependents, including Social Security numbers and dates of birth.
  • You can claim the credit even if you don’t owe any federal income tax, thanks to the partial refundability of the CTC. You can receive up to $1,500 of the credit as a refund.

What’s the CTC Amount for tax year 2023?

For the 2023 tax year (taxed to be filed in 2024), the CTC  will be worth up to $2,000 per qualifying child, with $1,700 being potentially refundable through the additional child tax credit.

  • The credit amount will be available as a refundable taxation credit on the federal tax return.
  • The specific payment amount will depend on the taxpayer’s modified adjusted gross income (MAGI) and other factors.
  • credit will be available for children under the age of 18.

CTC Payment Methods for tax year 2023

If the CTC simply involves raising the base credit amount or expanding the age limit, the payment method could remain the same as for tax year 2023, which are;

  • Direct deposit: If you have already provided your banking information to the IRS, the increased credit would be automatically deposited into your account on the same date as your regular child tax payments (if any).
  • Cheque: If you haven’t chosen direct deposit, the IRS would mail you a cheque for the increased amount.

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