The Child Tax Credit (CTC) allows parents and caregivers to reduce their tax rates and can even earn a refund amounting to $3600 per child.
Payment dates not being made until mid-February to allow due process of claims, whilst precise dates vary individually and can be calculated online.
There are conditions and restrictions on who can claim. This article explains income limits, CTC rules, age limits and when to expect refunds. So, are you eligible?
How much is the refund?
The refund is for a maximum of $3600 per qualifying child, although the credit is not 100% refundable meaning that the entire $3600 cannot be refunded as cash, even if a person has no tax liability.
But a portion of the CTC is available to be refunded.
What are the CTC rules
The tax credit comes with a series of clauses and rules that are as follows:
- Must be able to claim the child as a dependent on tax returns.
- The child must have lived with the claimant for half of the year.
- Must have provided half the child’s financial support in the last year.
- The child must hold a valid Social Security number.
- The child must be a son, daughter, stepchild, foster child, sibling, half-sibling, step-sibling or a descendant of any of these people such as a grandchild.
What are the income limits
Modified Adjusted Gross Income (MAGI) is used for joint claimants but is capped at $400,000 USD or $200,000 for other filers.
If a person is above this amount of income then they can still claim but only as a partial credit because $50 is taken off for every $1000 that your MAGI is above the limit.
For example, joint filers with a MAGI of $405,000 would qualify for a reduced credit of $1750 since their income is only $5,000 above the threshold.
What is the child tax credit age limit
The child must be under the age of 17 at the end of 2023, otherwise the claim isn’t valid.
A child who turns 17 during the tax year also doesn’t qualify, but might be eligible for other dependent tax credits worth $500.
Only one parent can claim per child, unless a joint return is filed. If a child lives with both parents and both claim, the parent with the higher Adjusted Gross Income (AGI) will be processed.
When to expect a refund
Claiming CTC might delay a refund due to the PATH Act, which means that refundable tax credits must be held until mid-February to ensure the refund is error-free and valid.
Use the “Where’s My Refund” link on the Internal Revenue Service’s website to precisely work out when a refund will be paid after filing the tax return.