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Everything You Need to Know About the Child Tax Credit

TaxAct’s Guide to Your 2021 Taxes Taxes

Raising kids is expensive. Thankfully, becoming a parent comes with some valuable tax breaks — most notably, the Child Tax Credit (CTC).

A happy man carrying daughter on his shoulder & both smiling while holding their hands together

What is the Child Tax Credit (CTC)?

The Child Tax Credit (CTC) is a tax credit for parents of dependent children designed to help offset the cost of raising kids.

For tax year 2022, $1,500 of the CTC is refundable, meaning you can claim up to this amount even if you do not owe any taxes or didn’t earn any income last year. On your 2022 return, you can claim the CTC for any children under age 17.

How does the Child Tax Credit work?

Like other tax credits, the CTC is valuable because it reduces your tax bill on a dollar-for-dollar basis. For example, if your adjusted gross income (AGI) was $50,000 in 2022 and you qualify to claim a $6,000 Child Tax Credit, the credit reduces any taxes you owe by $6,000. So, if your tax bill turns out to be $8,000, your $6,000 credit would reduce the total amount of taxes you owe to $2,000.

To recap, up to $1,500 the Child Tax Credit is refundable this year. So, for example, if you qualify to receive a $6,000 CTC, but you only owe $3,000 in taxes, your tax credit reduces your bill to $0, and you get to pocket $1,500 of the remaining $3,000.

How much is the Child Tax Credit for tax year 2022?

For the 2022 tax season, the maximum total credit amount is $2,000 per child under age 17.

You qualify to claim the maximum value of the Child Tax Credit if your modified adjusted gross income (MAGI) is $400,000 or below for joint filers or $200,000 or below for all other filers.

If your AGI is higher than those limits, you could still receive a portion of the increased tax credit. In that event, your credit amount will be reduced by $50 for every $1,000 over the threshold

Child Tax Credit qualifications

Do I qualify for the Child Tax Credit?

Your eligibility for this tax credit depends on your relationship to the child and the child’s age. In 2022, the child you are claiming the credit for needs to be under age 17 as of Dec. 31, 2022. Qualifying dependents must be your son, daughter, adopted child, foster child, stepchild, younger sibling, stepsibling, or a descendent of any of them (such as your niece, nephew, or grandchild).

You must have a valid Social Security number (SSN) and any children you claim must also have a valid SSN.

If the child does not have a valid SSN but does have an ITIN, you may be able to claim the Credit for Other Dependents. This is a $500 (non-refundable) credit for dependents who do not qualify for the CTC, such as dependent parents and other relatives or dependents living with you who are unrelated to you.

Is the Child Tax Credit taxable?

No, the Child Tax Credit is not taxable.

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