What to know about the child tax in 2023

Two major credits have returned to pre-crisis levels, meaning parents may see smaller tax refunds this year.

WASHINGTON – With many of the tax breaks and tax cuts coming to an end, many parents could see too much. small tax returns this year.

Of the Child tax credit and the child support and maintenance debt they all fall back to the original levels, meaning parents could end up with a few thousand dollars less than they expected. Here are the things to know.

What is the child tax credit?

The child tax credit is a tax break for eligible families with children. It was more generous in 2021, and many families received half of the loan in the first months’ payments instead of a down payment. Under the America’s Rescue Plan passed by Congress in March 2021, the Child tax credit was increased by $3,600 for children ages 5 and under and $3,000 for those ages 6-17.

HELP: Why is my tax return low this year?

With Congress’ decision not to extend the extension, the child tax credit was restored to $2,000 per eligible child for fiscal year 2022. Families can claim the full amount, but not it’s fully refundable, which means your tax bill can be reduced to zero – it won’t show up on your refund.

So what if you owe more in child taxes than you owe? There is still a way to put some money in your pocket. According to the Consumer Financial Protection Bureau, you may be able to claim up to $1,400 of the remaining child tax credit for the dependent. This is called the Child Tax Credit.

Who is eligible for the child tax credit?

Nerdwallet saidThere are seven “tests” you need to pass to claim the child tax credit when you file this year: Age, relationship, dependency, residency, financial support, citizenship and income.

For example, the child must be dependent and under the age of 17 after 2022. They need to have a family relationship with you, including the son. or daughter, niece, foster children, grandchildren, niece or nephew, etc.

There are also income requirements. TurboTax says Caregivers with an adjusted gross income of more than $400,000 (married) or $200,000 (other filing status) will have a slightly lower rate. credit for every $1,000 they earn above that limit. At the other end of the spectrum, families need an income of at least $2,500 to get the credit on their return.

Other credit changes

Another reasonable allowance for families, the child and dependent care, will return to the 2019 level.

This credit is meant to help working parents pay for childcare expenses and other dependents, it reached a peak of $8,000 in 2021. For 2022, the maximum goes back down to $1,050 for one eligible person and $2,100 for two or more.

Moving on to the American Rescue Plan, these changes to tax credits and eligibility were mostly in response to COVID, explains Braden Williams, a professor assistant professor at the University of Texas at Austin. The expansion of tax credits and incentive checks are ways to encourage economic activity after the economic crisis in the United States.

“(With) these types of bills that are intended to stimulate the economy, to encourage investment growth, funds should be set aside to implement them. this situation,” said Williams. “So the things that are usually written in the law are temporary tax provisions…after a while, they gradually disappear, or they just disappear.”

And because many tax liabilities have returned to their pre-epidemic levels, it is certain that more attention will be paid in the coming months to the debt limit.

“The purpose of the tax system, first of all, is to generate revenue to fund the government,” said William. “The cost of a large child tax credit is that you’re giving away tax revenue. We’re now looking at the use of credit that has some obstacles on the revenue side.”

Melissa Hernandez De La Cruz contributed to this report.

(embed)https://www.youtube.com/watch?v=v31BH7yrg44(/embed)

Leave a Comment