How to Take Advantage of the Child Tax Credit in 2023
Summary
The Child Tax Credit is a federal tax benefit that provides financial support for American taxpayers with children. For the 2023 tax year, taxpayers may be eligible for a credit of up to $2,000 — and $1,600 of that may be refundable. To qualify, taxpayers and their children must meet certain eligibility criteria that take into account the child’s age, as well as their relationship to the person claiming them. Taxpayers must also meet income thresholds to take full advantage of the benefit because the credit phases out for high earners.
Detail Explanation
The Child Tax Credit (CTC) is a nonrefundable tax credit available to taxpayers with dependent children under the age of 17. The credit can reduce your tax bill on a dollar-for-dollar basis, potentially eliminating your tax bill altogether. Some taxpayers may also be eligible for a partial refund of the credit through what’s called the “additional child tax credit” (ACTC).
For the 2023 tax year, taxpayers may be eligible for a credit of up to $2,000 — and $1,600 of that may be refundable. To qualify, taxpayers and their children must meet certain eligibility criteria that take into account the child’s age, as well as their relationship to the person claiming them. Taxpayers must also meet income thresholds to take full advantage of the benefit because the credit phases out for high earners.
The credit amount decreases if your modified adjusted gross income exceeds $400,000 (married filing jointly) or $200,000 (all other filers).
Key Points
- The Child Tax Credit is a federal tax benefit that provides financial support for American taxpayers with children.
- For the 2023 tax year, taxpayers may be eligible for a credit of up to $2,000 — and $1,600 of that may be refundable.
- To qualify, taxpayers and their children must meet certain eligibility criteria that take into account the child’s age, as well as their relationship to the person claiming them.
- Taxpayers must also meet income thresholds to take full advantage of the benefit because the credit phases out for high earners.
- The credit amount decreases if your modified adjusted gross income exceeds $400,000 (married filing jointly) or $200,000 (all other filers).
Pros and Cons
| Pros | Cons |
|---|---|
| Reduces tax bill on a dollar-for-dollar basis | Credit phases out for high earners |
| Some taxpayers may be eligible for a partial refund of the credit | Credit amount decreases if your modified adjusted gross income exceeds $400,000 (married filing jointly) or $200,000 (all other filers) |
Tips for the Reader 🤔
If you have dependent children under the age of 17, you may be eligible for the Child Tax Credit. To take full advantage of the benefit, make sure you meet the eligibility criteria and income thresholds. If you’re unsure about your eligibility, consult a tax professional.
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