Can I claim the child tax credit this year?

This time of year, many people start to relax and focus on taxes. And it’s a good idea to start gathering documentation, whether it’s a 1099 form from a brokerage account or a tax form from your employer.

Now you know that there are a variety of tax credits you can look into when filing your 2023 taxes. One such credit is the Child Tax Credit.

You may have heard that the Child Tax Credit was a pandemic-era benefit, but is now long gone. But that is actually far from the truth.

The Child Tax Credit is still in progress.

In 2021, lawmakers passed a massive stimulus package to help Americans cope with the financial fallout from the pandemic. One part of that package includes an enhanced child tax credit.

For tax year 2021, not only has the maximum amount of the child tax credit been increased, but the credit has also become fully refundable. This means that even people who don’t owe taxes can receive the full tax credit from the IRS.

The enhanced child tax credit is repealed in 2022. However, the pre-pandemic version of the deduction still exists. So, if you qualify, you’ll want to claim it on your upcoming tax return.

To qualify for the child tax credit, you must have a dependent child under the age of 17. If you have multiple children in that category, you can claim the tax credit for each child.

However, there are income limitations associated with the credit. If you are single, the credit begins to phase out once your modified adjusted gross income (MAGI) exceeds $200,000. If you are married and file a joint tax return, the phaseout begins at MAGI of $400,000.

For tax year 2023 (the year you currently file your tax return), the child tax credit is available for up to $2,000 per child, of which $1,600 is refundable. For tax year 2024, the refundable credit amount increases to $1,700. But since you won’t file your 2024 taxes until next year, keep the $1,600 limit in mind for now.

Will the Child Tax Credit be strengthened?

Some policymakers have been fighting for an enhanced version of the child tax credit starting in 2022. And lawmakers recently introduced a proposal that would make tax credits more refundable.

As previously mentioned, only $16 million of the credit is refundable for tax year 2023, and only $17 million is refundable for tax year 2024. Under this new proposal, the refundable portion of the tax credit will increase as follows:

• $1,800 for tax year 2023
• $1,900 for tax year 2024
• $2,000 for tax year 2025

The proposals mentioned above have not yet passed as of this writing. But even if you don’t, credits still offer a lot of value. So it’s a good idea to check if you qualify.

If in doubt, consult a tax professional. It may be worth paying a modest fee if you can get up to $2,000 per child from the IRS when you file your taxes this year and in future years if the child tax credit is still available.

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