Are you a parent or legal guardian who wants to give your children the best, but find the costs of raising a family overwhelming? Recent reports show that raising a child can cost over $200,000 throughout their lifetime. Fortunately, the Child Tax Credit (CTC) can help reduce those costs by providing a tax benefit that gives you money back during tax season. If you’re not familiar with this credit, you could be missing out on a valuable opportunity to save money. In this article, we will explain what this tax benefit is and how it could help your family.
Next, we will answer the following questions:
- What is the child tax credit?
- How much money can someone receive from the child tax credit?
- What are the eligibility requirements?
- Do I need a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN) to receive this credit?
- What other tax credits may be available to me as a parent?
- Where can I file my taxes for free or at a low cost?
What is the child tax credit?
The child tax credit (commonly referred to as the CTC) is a tax credit available to taxpayers with dependent children under the age of 17. To claim the credit when you file your taxes, you have to prove to the Internal Revenue Service (IRS) that you and your child meet specific criteria.
How much money can someone receive from the child tax credit?
For tax returns filed in 2023, the Child Tax Credit is worth up to $2,000 per qualifying dependent under the age of 17. It is important to understand that the credit can be either refundable or non-refundable depending on the following two scenarios:
- The credit will be non-refundable if a family owes taxes. They can use the credit to reduce the amount of taxes they owe, but they can’t get more money back than what they owe in taxes.
- The credit is refundable if the credit is worth more than the amount of taxes a family owes. This means that even if a family owes little or no taxes, they may still be eligible for a refund for the refundable portion of the credit, which can be up to $1,500 per child.
What are the eligibility requirements?
There are three main requirements to claim the child tax credit:
- Income: Your adjusted gross income is less than $200,000 when filing individually or less than $400,000 if filing a joint return with a spouse.
- Taxpayer identification number: You must have either a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN) to claim this credit.
- Qualifying child: You must be the parent or guardian of a child who must have been under the age of 17 at the end of 2022 and have a Social Security Number (SSN).
For more information on eligibility requirements, please click here.
What other tax credits may be available to me as a parent?
In addition to the child tax credit, there are several other tax credits that parents may be eligible for, such as:
- A $500 non-refundable credit is available for families with qualifying dependents who can’t be claimed for the child tax credit. This includes children with an ITIN who otherwise qualify for the CTC. Additionally, qualifying relatives (like dependent parents) and even dependents who aren’t related to you, but live with you, can be claimed for this credit. Since this credit is non-refundable, it can only help reduce taxes owed.
- Earned Income Tax Credit (EITC): The earned income tax credit is available for families with three or more eligible children and earning less than $53,057 as a single person or $59,187 as a married couple filing jointly. It is a refundable credit that can help low-income families with children reduce their tax liability or receive a refund.
- Child and Dependent Care Credit: This is a federal tax benefit that helps families pay for child care so they can go to work or look for a job. The credit is also available to families that must pay for the care of an incapacitated spouse or an adult dependent who is unable to physically or mentally take care of his or herself.
Where can I file my taxes for free or at a low cost?
If you’re looking for a way to file your taxes for free or at a low cost, there are several options available, such as:
- The Internal Revenue Service (IRS) offers the Free File program, which provides free tax software to eligible taxpayers with an adjusted gross income of $73,000 or less.
- Volunteer Income Tax Assistance (VITA) is a program that offers free tax help to people who make $60,000 or less, persons with disabilities, the elderly, and limited English-speaking taxpayers who need assistance in preparing their tax returns.
- Finally, the Tax Counseling for the Elderly (TCE) program provides free tax assistance to individuals who are 60 years of age or older.
For more information on how to file your taxes for free or at a low cost, click here.