Getting To Know The Facts About The 2023 Child Tax Credit

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Child Tax Credit Tax Credits
Child Tax Credit

The tax overhaul in 2017 doubled the maximum amount of the Child Tax Credit stimulus check to $2,000 from $1,000 for each child in a family under age 17 at year-end. This rule is applicable for both 2022 and 2023. This credit is a dollar-for-dollar reduction in income tax that individuals and families with children can claim

The Child Tax Credit stimulus check that was part of the American Rescue Plan Act signed by incoming Democrat President Joe Biden in March 2021 provided the largest CTC payment ever. It enabled parents to get a historic relief, and it benefitted most working families in the low and moderate-income wage group. 

This enhanced version of the CTC stimulus check was different from the normal annual payments as the amount was substantially increased from $2,000 to between $3,000 and $3,600 depending on the age of the child. Children below six received $3,600 while those between 6 and 17 received $3,000.

The Child Tax Credit As An Advance Payment

The enhanced child tax credit was one of the most successful federal tax benefits that played an important role in providing financial support for American taxpayers with kids. People with children under the age of seventeen were eligible to claim a tax credit. And in 2021, for the first time, the CTC stimulus check was given in an advance form. 

So instead of the stimulus checks coming in as a deduction against the 2021 income tax payments, 2021 enhanced CTC stimulus checks were given as an advance in 2021. Between July and December 2021, parents received 50% of the total amount in six equal monthly checks of either $250 or $300 depending on the age of the child. For the first time, the age limit was raised from sixteen to seventeen. Working families got full credit if they made up to $150,000 for a couple or $112,500 for a family with a single parent, or a Head of Household. 

Child Tax Credit
Child Tax Credit

After the monthly payments ended in December 2021, parents had to report those payments on federal tax returns to receive the remaining 50% of their child tax credits. Many parents opted out of 2021’s monthly advance payments. These families got the total amount against their 2021 income tax returns filed in the 2022 tax season. 

Some parents received the full amount even if they were not eligible for it. For those who did not qualify or whose eligibility changed during the ear, they had to pay back the excess portion of the Child Tax Credit stimulus check when they filed their income tax return for 2021.

Qualifying For The Enhanced Child Tax Credit Stimulus Check

Parents qualified for the full amount as stipulated in the enhanced stimulus checks. The following categories were outlined by the IRS. $150,000 or less in total earned income for married couples filing jointly. Up to $112,500 in earned income for single parents or heads of household. $75,000 or less in earned income if filing as an individual.

If the parent met any of these total requirements, each dependent under the age of six received an amount of $3,600 in total. Children aged six to seventeen added $3,000 to the household total stimulus check. Parents of dependents aged eighteen or twenty-four. They received a stimulus check of up to $500 once they file their income tax returns. 

For those who made more than the income requirements, you may still get advance Child Tax Credit payments but less than the maximum amount. The Internal Revenue Service deducted $50 from each advance stimulus check for every $1,000 in earnings above the income limit. 

So for someone who has made $85,000 as a single filer, they would be eligible for up to $200 per child per month. Depending upon the age of the child.

There were a few more eligibility requirements for dependents to get the full amount of the state government. They must be an American citizen. They must be younger than seventeen before the last day of the tax year and must be claimed on the income tax return of their parent or parents. 

Check Your Child Tax Credit Eligibility Online

Before starting on your quest to get the child tax credit eligibility online, you have to ensure that you have a copy of your latest income tax return. Those who do not have their income tax return on hand, can switch over and use their filing status and the total income as shown in the tax year 2021.

The IRS Eligibility Assistant tool answers a few quick questionnaires. Go to the Advanced Child Tax Credit Eligibility Assitant tool page located on the IRS website.  Check your eligibility and answer a few basic questions about yourself and your income tax return. For instance, will have to reveal if you have claimed the Child Tax Credit on any of your previous income tax returns. 

child tax credit
Child Tax Credit

You may also need to provide additional information depending on how you answered the question. Here is where you need to fill in your filing status, Adjusted Gross Income (AGI), and the number of children that you have claimed on your income tax return. You will also need to enter their ages. 

Next, the tool will inform you whether you have qualified based on the answers you have provided. It will also reveal the amount that each of the kids under the age of six will qualify for. You will also know how much each kid aged between six and seventeen qualifies for. You will also learn the income phaseout details. The next step requires you to click Manage Your Advance Child Tax Credit payments, which will take you directly to the child tax credit portal. 

You will need to ensure that the Eligibility Assistant tool and the Child Tax Credit Update Portal do not tell you how much you are eligible for. The tool also does not reveal the personalized total you will get and how much the payment will be reduced if your income exceeds the limit.