How Much Is The Child Tax Credit Today?

When we have a child, our lives are immediately filled with joy. Children bring so much happiness to our lives as they grow and mature, and it really is a great experience. However, children can be expensive. Each child could cost the parents hundreds of thousands of dollars over the course of their lives, from the time you start buying diapers until they go to college. Luckily, the U.S. government feels your pain, so they try to help by offering a child tax credit. 

This is money that is meant to help parents raise their children in the right way so they can grow and thrive. In this article, we will talk about how much you can expect from your tax credit in the year 2023 and the qualifications you will need to meet along the way.

Key Points

• The current child tax credit for 2023 is $2,000. If you have a child under 17, they are eligible for this tax credit.
• If you have a dependent that is not your child, you may be eligible for a $500 tax credit.
• If a two-parent household makes more than $400,000 or a single-parent household makes more than $200,000 in a given year, they are not eligible for the tax credit. In addition, a household must make at least $2,500 in a given year to be eligible.

How Much is the Child Tax Credit in 2023?

If you are raising a child in your house, then you are still currently eligible for a tax credit. Typically, the credit applies to families that have a birth child in the home. However, you may also be eligible for a smaller credit if you have a child in your home that isn’t yours but is a qualifying dependent. According to the White House and the President of the United States, the current child tax credit in 2023 is $2,000.

Currently, the tax credit is part of the American Rescue Plan. In it, they state that a family with a child that is at age 16 or younger is eligible for $2,000. Keep in mind that the total tax credit you can receive is $6,000. At this time in 2023, families can continue to take advantage of the tax credit until they turn 17 years of age. Remember that these laws can change over time, so the credit may be different next year or not exist at all.

If you have a dependent that you take care of, but they are not your birth child, then you may still be available for a smaller $500 non-refundable credit. 

Who Is Eligible For the Child Tax Credit?

It is important to remember that while many families will qualify for the tax credit, certain conditions must be met. Among them are:

1. Income – In a family with two working parents that file jointly, they must make less than $400,000 during the course of the year. If there is only one working parent or a family with a single parent (head of household), then they must make less than $200,000. With that said, eligibility also requires that you have more than $2,500 in earnings during the course of that year.

2. Proper Identification – Even if you are within the salary boundaries, you and your spouse (if applicable) must have a valid social security number or taxpayer identification number.
   
3. Qualifying Child – In order to claim the child tax credit, you must have a qualifying child in the household (More on that below).
   
4. File Your Taxes – The child credit is not automatic. You must file your taxes and add eligibility for the CTC. Remember that taxes are due by April 18.

Requirements for a Qualified Child

In order to get the child tax credit, your child must meet the following requirements:

Relationship – Your child must be born to your family by birth or be brought in by legal adoption or marriage. Basically, they must be one of the following:

• Daughter
• Son
• Stepchild
• Grandchild
• Younger child
• Half-sibling
• Step-sibling
• Adopted child
• Foster child that was placed with you via a government agency. 

Age – With the new changes in 2023, the child must be 16 years old or younger.

Residency – The child must live with you in the United States. They must have lived with you for more than half of a year. Keep in mind that the time does not need to be continuous. As a side note, federal employees and U.S. military personnel that are assigned outside of the U.S. also qualify. 

Proper Identification – Just like their parent, the child must also have a valid social security number. Unlike in the past, in 2023, a child with ITIN (Individual Taxpayer Identification Number) will not suffice. 

Dependency – Since this is a tax-related credit, the child must be considered to be a dependent for your tax filing purposes.

Are There Similar Credits I Can Get?

There are a few similar tax credits you may want to look into:

• Child and dependent credit: This credit is meant to cover a portion of daycare and similar costs for children under 13, a spouse that can't care for themselves, or a similar dependent. It will cover up to 35% of these expenses, up to $3,000 for one qualified dependent or $6,000 for two qualified dependents.
• Adoption credit: This credit covers up to $14,890 in adoption costs per child. This credit decreases as your income increases. If you make more than $263,410 in a given year, you are not eligible for this credit.
• Medical expenses deduction: This credit allows you to write off qualified, unreimbursed medical expenses that are more than 7.5% of your AGI for the tax year.

Conclusion

So there you have it. Keep in mind that this is a government program, so things can change depending on the year and the laws that are passed during that time. If you are trying to get the CTC or any other tax credits, then make it a point to speak to a tax professional before you continue. In the meantime, we hope this money helps you and your family to thrive in the year ahead.

The image featured at the top of this post is ©iStock.com/AnnaStills.