The Child Tax Credit (CTC) is one of the best tax benefits available for parents. This tax benefit gives parents a break by lowering their tax bill or boosting their refund. If you’re a parent, understanding how the CTC works could save you a lot of money at tax time.
Let’s dive into the details - what it is, who qualifies, and how to claim it. And if the thought of tax prep stresses you out, AMG Finance is here to make the process easier.
What Is the Child Tax Credit?
The Child Tax Credit is a federal tax benefit designed to help families offset the costs of raising children. It’s a refundable or partially refundable credit, meaning eligible families can receive a refund even if they owe little or no federal income tax.
For 2023, you could get up to $2,000 per qualifying child under 17. Even if you don’t owe much (or any) federal income tax, part of the credit is refundable - meaning you could get cash back in your pocket.
Key Changes to the Child Tax Credit in Recent Years
The Child Tax Credit has undergone several changes in the past few years. Understanding these updates is crucial to ensuring you claim the maximum benefit:
Expanded Credit in 2021: During the pandemic, the American Rescue Plan temporarily increased the credit to $3,600 for children under six and $3,000 for children aged 6–17. The credit was also fully refundable.
Reversion to Pre-Pandemic Levels: For 2022 and 2023, the credit returned to $2,000 per qualifying child, with a partial refundable portion of up to $1,500 (indexed for inflation).
Income Phase-Outs: The CTC begins to phase out for higher-income earners. For 2023, the phase-out starts at $200,000 for single filers and $400,000 for married couples filing jointly.
Who Qualifies for the Child Tax Credit?
To claim the CTC, both you and your child need to meet specific requirements:
Qualifying Child Rules
Your child must:
Be under 17 at the end of the tax year.
Be your biological child, stepchild, foster child, sibling, or a descendant of one of these (like a grandchild or niece/nephew).
Have lived with you for more than half the year.
Be claimed as your dependent.
- Have a valid Social Security number.
Income Limits
The full $2,000 credit is available if your income is:
Under $200,000 for single filers.
Under $400,000 for married couples filing jointly.
For every $1,000 you earn above these limits, your credit is reduced by $50.
Citizenship Requirements
Your child must be a U.S. citizen, national, or resident alien.
Taxpayer Identification
You (the parent) need a valid taxpayer ID, such as a Social Security number or ITIN.
How to Claim the Child Tax Credit
Claiming the CTC isn’t hard, but it does require a little paperwork. Here’s how to do it:
1. Gather Your Documents
Your child’s Social Security number.
Proof of residency (like school or medical records).
Your income documents (W-2s, 1099s, etc.).
2. Fill Out Your Tax Return
Use IRS Form 1040 and complete Schedule 8812 to calculate your CTC.
3. Double-Check Everything
Ensure your child’s name and Social Security number match their card.
4. File Your Taxes
You can do this online, by mail, or with the help of AMG Finance.
How Can The Child Tax Credit Benefit You?
The CTC can be a game-changer for your family’s finances. Here’s how:
Covers Costs: From diapers and school supplies to extracurricular activities, raising children is expensive. The CTC offers direct financial relief.
Boosts Your Refund: Even if you don’t owe much in taxes, the refundable portion puts extra cash in your pocket.
Reduces Your Tax Bill: For families who do owe taxes, the credit directly lowers what you pay to the IRS.
Common Mistakes to Avoid
Don’t let small errors cost you part of your credit. Here are the big ones to watch out for:
Wrong Dependent Info: Double-check your child’s name and Social Security number.
Residency Issues: Ensure your child has lived with you for more than half the year.
Missing Documentation: Keep proof of residency and income handy.
Income Miscalculations: Know where you stand with the income limits.
How AMG Finance Can Help
Tax season can be stressful, especially when you’re trying to maximize credits like the CTC. AMG Finance’s tax preparation services are here to simplify the process and ensure you claim every dollar you’re entitled to.
Our tax professionals stay up to date on the latest tax laws and credits. We also make sure your tax return is prepared accurately and on time to minimize errors that could delay your refund.
Simplify Tax Season
Claiming the Child Tax Credit is one of the most effective ways to reduce your tax burden and increase your refund. But navigating tax forms and rules can be overwhelming, and mistakes can cost you money.
Maximize your return with AMG Finance. We’ll make sure you get every benefit you’re entitled to - and we’ll do it without the headaches.
Contact AMG Finance today to schedule your tax prep appointment.
