This tax season might look at little different for some filers, but especially those who qualify for the child tax credit.
While last year saw returns rise due to the coronavirus pandemic, another change is in store for this year.
Tax filing season is officially underway, with both state governments and the Internal Revenue Service accepting income tax returns starting last week.
But for many parents, this one credit could make a huge difference in your return.
Here’s a look at how to find out if you’re eligible and for how much:
Who is eligible for a child tax credit?
The child tax credit is based on a number of eligibility factors involving a filer’s claimed dependents and annual income.
Those who have a qualifying child and an annual income of less than $200,000 individually or $400,000 if filing jointly, will be eligible for the full credit amount for each eligible child.
Those with higher incomes could still be eligible for a partial credit, however.
So how do you know if your child qualifies?
According to the IRS, in order for filers to qualify for this credit for the 2022 tax year, their dependent must:
- Be under age 17 at the end of the year
- Be the filer’s son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these (for example, a grandchild, niece or nephew)
- Provide no more than half of their own financial support during the year
- Have lived with the filer for more than half the year
- Be properly claimed as your dependent on the filer’s tax return
- Not file a joint return with their spouse for the tax year or file it only to claim a refund of withheld income tax or estimated tax paid
- Have been a U.S. citizen, U.S. national or U.S. resident alien
If you’re still unsure, you can check here.
How much is the credit for?
Amounts for the Child Tax Credit and Dependent Care Credit change yearly, with both seeing changes this year.
The federal government rolled out several tax benefits to help families struggling during the coronavirus pandemic last year, but now, those pandemic benefits have expired.
“A lot of the things like the child credits and the child care credits are back down to where they were before the pandemic,” Judy Strauss, an enrolled agent who runs Strauss Tax Services in downtown Chicago, told NBC 5.
Financial and tax experts said families filing these claims could see a smaller refund compared to previous years.
“The child care tax credit, that’s No. 1 on the list during the pandemic in 2021,” said Dan Rahill, managing director at Wintrust Wealth Management. “That increased to $3,600 for children under 6 and $3,000 for other children under 17. Now that reverts back to pre-pandemic rules, and it’s only going to be $2,000 for per child this year.”
How do I claim the child tax credit?
You can claim the Child Tax Credit by entering your children and other dependents on Form 1040, U.S. Individual Income Tax Return, and attaching a completed Schedule 8812, Credits for Qualifying Children and Other Dependents.
What else should I know before filing my taxes?
For those who file for the child tax credit, the IRS notes they may also be eligible for other tax credits include:
- Child and Dependent Care Credit
- Earned Income Tax Credit
- Adoption Credit and Adoption Assistance Programs
- Education credits
“You may qualify for the Credit for Other Dependents for a child or dependent who is not a “qualifying child” for purposes of the Child Tax Credit,” the IRS reports.
- File electronically and use direct deposit
According to the Illinois CPA Society, both filing electronically and using direct deposit are important steps to ensure that both your tax return and refund payment are processed with minimal delays.
The IRS has advised taxpayers to avoid filing paper returns whenever possible, adding that filing electronically is the fastest, easiest, and safest way to file a tax return.
“Taxpayers are encouraged to file electronically as early as possible in the tax season and choose direct deposit in order to ensure the fastest processing and issuance of any refunds,” IDOR Director David Harris said in a statement. “Electronic filing is also available through third-party software or with most tax preparers.”
Can I file for an extension on my taxes?
While the deadline for most taxpayers to file their returns is April 18, taxpayers who request an extension will have until Oct. 16 to file.
If taxes are owed, however, any remaining taxes must be paid by April 18.
When will I receive my refund?
According to the IRS, taxpayers who file electronically and use direct deposit should receive their refund payments within 21 business days, as long as there are no issues with the return.
Taxpayers who are receiving refunds that include the Earned Income Tax Credit or Additional Child Tax Credit cannot be issued their refunds before mid-February due to the Protecting Americans From Tax Hikes Act of 2015, which provides additional time for the IRS to ensure fraudulent refunds are not issued.
What else has changed?
“Refunds may be smaller in 2023,” the IRS said in a November release. “Taxpayers will not receive an additional stimulus payment with a 2023 tax refund because there were no economic impact payments for 2022. In addition, taxpayers who don’t itemize and take the standard deduction, won’t be able to deduct their charitable contributions.”
IRS leadership says taxpayers should expect a smoother filing season this year.
“We’ve trained thousands of new employees to answer phones and help people. While much work remains after several difficult years, we expect people to experience improvements this tax season,” said Acting IRS Commissioner Doug O’Donnell.
The IRS has most recently added 5,000 new customer service representatives who were trained in taxpayer rights and technical account management issues and is chipping away at the hundreds of thousands of unprocessed returns from last tax season.