The 2022 tax season is right around the corner, and now is a great time…
During the coronavirus pandemic, the American Rescue Plan temporarily boosted the maximum Child Tax Credit amount to $3,000 (children between the ages of 6 and 17) and $3,600 (children under age 6) for the 2021 tax year. It also allowed eligible taxpayers to receive a portion of the credit through automatic monthly payments instead of waiting to claim the full amount when filing their taxes. Although lawmakers made a last-ditch effort to keep the Enhanced Child Tax Credit changes in place for the 2022 tax year, the credit has now reverted to its pre-COVID amount. So, how much is the Child Tax Credit worth this tax filing season? Here’s what you need to know.
When the Child Tax Credit (CTC) was originally introduced under the Taxpayer Relief Act of 1997, it was worth $500 per child. It was also a non-refundable tax credit. Four years later, the credit amount was increased to $1,000 and became partially refundable. Then, in 2017, President Trump made significant changes to the CTC under the Tax Cuts and Jobs Act (TCJA). The TCJA doubled the maximum credit amount, increased the income limit for phaseout, and increased the refundable credit amount.
For the 2022 tax year, the Child Tax Credit returns to its pre-COVID amount of $2,000 per qualifying dependent. Since the CTC is a refundable tax credit, you may be eligible for a tax refund of up to $1,500 per child if the credit amount exceeds your total tax liability.
The income limits for the CTC have reverted to the 2020 tax year levels, as well. That means more taxpayers will qualify for partial or full credit. If your modified adjusted gross income (MAGI) exceeds the phaseout limit for your filing status, the credit is reduced by $50 for each $1,000 over the limit until it is eliminated.
Filing Status | 2021 Tax Year MAGI Phaseout | 2022 Tax Year MAGI Phaseout |
$3,000 per child (6-17 years old) or $3,600 (children under 6) | $2,000 per child | |
Single | $75,000 | $200,000 |
Head of Household | $112,500 | $200,000 |
Qualifying Widow(er) | $150,000 | $200,000 |
Married Filing Separately | $75,000 | $200,000 |
Married Filing Jointly | $150,000 | $400,000 |
To qualify for the Child Tax Credit, you must have at least $2,500 in earned income. You must also have a Social Security number (SSN) or individual taxpayer identification number (ITIN) issued on or before the due date of your 2022 tax return (April 18, 2023). Additionally, your qualifying child must meet these six tests:
If you and your dependent(s) do not meet these requirements, or your income is too low or too high, you are ineligible to claim the Child Tax Credit.
To claim the Child Tax Credit, you will need to file Form 1040 or 1040-SR. Additionally, you will need to complete Schedule 8812, Credits for Qualifying Children and Other Dependents, to determine your CTC amount. This form must be submitted with your tax return. If you are using tax software, you’ll be asked a series of questions that will determine your eligibility and prepare the forms for you.
Depending on your income level, you may also qualify for free tax help through the Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) program. You can also work with a paid tax professional to ensure you get the maximum credit you deserve.
Please note that the IRS won’t issue your full tax refund until at least mid-February if you claim the CTC and are due a refund.
If you claim a dependent on your tax return but they don’t qualify for the Child Tax Credit, you may be eligible for the Credit for Other Dependents (ODC). This non-refundable tax credit has a maximum value of $500 per eligible dependent. The ODC can be claimed for:
You cannot claim the ODC and the CTC together. You can, however, claim the ODC in addition to the Child and Dependent Care Credit and the Earned Income Tax Credit.
Although the deadline to file your 2021 taxes has passed, you can still claim any refund you may be due under the Expanded Child Tax Credit. You have until April 18, 2025, to file a paper tax return and claim the credit. If you already filed and neglected to claim the CTC for 2021, you can also file an amended tax return. Failure to file within three years of the original deadline date will result in the forfeiture of any refund you may be owed.
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