The Child Tax Credit: Here’s What To Know For 2023

by | Mar 13, 2023 | Tax Lawyer

To lessen the economic effect of the pandemic, millions of American families got an increased child tax credit in 2021; however, parents can anticipate a smaller tax break for their dependents this year.

Parents could earn up to $3,600 for each child under the age of six in 2021, and $3,000 for other children, up to and including 17-year-olds. The program returned to its original form in 2023 after those improvements had ended, which was less generous ($2,000 per dependent under the age of 17).

According to tax advisor Lisa Niser, “the biggest change from 2021 to 2022 is a lot of special one-year provisions expired.” “There are no advanced payments for the child tax credit, and the amounts have been reset to 2020 values. For many people, that difference makes a huge impact.


Understanding the Child Tax Credit For 2023

Although it has returned to its prior amounts, the child tax credit is not going away. Before the IRS will allow you to claim the tax credit, you and your children must fulfill several criteria, such as:

  • Adjusted gross income of $400,000 or less for married couples, $200,000 or less for everyone else in terms of income (single taxpayers and heads of households). For every $1,000 of revenue above the cutoff, your credit amount is decreased by $50.
  • Each eligible child must be a citizen or lawful permanent resident of the United States and possess a valid Social Security
  • The child belongs to one of the following categories: legally acknowledged child, stepchild, foster child, sibling, half-brother, half-sister, or descendant of one of these. (i.e. a grandchild, niece, or nephew).
  • In the previous year, you were responsible for at least half of the child’s financial
  • The qualifying child spent more than half of the year with
  • On your tax return, you must list the child as a

Will Congress Authorize Additional Monthly Payments of the Child Tax Credit?

Democratic legislators sought to extend the child tax credit past the 2021 tax year because it had significantly reduced child poverty in the country. However, rather than being paid out in advance monthly installments, the credit for the 2022 tax year was reduced to $2,000 for each eligible child because the measure was not approved before Congress broke for the year at the end of 2022.

That is not to say that Congress won’t move further in the future to bring back the $1,000 or $1,600 child tax credit top-up. In his State of the Union address, President Joe Biden urged Congress to reinstate the expanded child tax credit.

In his State of the Union address, Biden urged Congress to “restore the full child tax credit—which gave tens of millions of parents some breathing room and cut child poverty in half to the lowest level in history.”


The Potential Effects The Reduced Child Tax Credit Could Have On The 2023 Tax Filing Season

One of many tax credits that have returned to its pre-COVID norms is the child tax credit.

It’s one of the reasons the IRS has cautioned taxpayers that refunds this year are likely to be “significantly smaller.” According to experts, the pandemic’s less generous tax breaks, such as the increased child tax credit, earned income tax credit, and the absence of stimulus checks, result in smaller refunds.

Because there aren’t all these new advantages this year, like the advanced child tax credit and stimulus payments, “people may get a smaller refund,” Niser warned.

As of February 11, more than 28 million tax returns had already been completed, and the average refund was $1,997, 14% less than at the same time last year. However, as tax season progresses and more people file their returns, that number is expected to change.


What You Should Know About The Extra Child Tax Benefit

You might still be able to use the extra child tax credit even if your taxes break even. Even after your tax liability is zero, this part of the child tax credit entitles you to a refund of up to $1,500 per child. For instance, Tim and Martha, a married couple with a child, are eligible for a $2,000 maximum child tax credit. Their tax burden is only $1,000. The extra child tax credit is used in this situation. With it, Tim and Martha might be able to receive a $1000 refund. In the middle of February, the IRS started issuing refunds that include the extra child tax credit and earned income tax credit.


Claiming The Child Tax Benefit

You can claim the child tax credit and the additional child tax credit (if available) if you’re a parent who satisfies the requirements by listing your eligible children on your Form 1040. To calculate your child tax credit amount and include it in your tax return, you must also submit Schedule 8812. The IRS has detailed directions on how to complete Schedule 8812 available.


What Taxpayers Should Do Now

  1. Verify the 2022 requirements to see if you are eligible for the child tax credit this tax The temporary enhanced provisions for the benefit no longer apply.
  2. Prepare for smaller refunds: Due to the reduced tax benefits this year, families should prepare for smaller tax refunds. Tax professionals advise using refunds to pay down debt and have emergency backup funds if you receive
  3. Check to see if your state offers a state child tax credit. According to the National Conference of State Legislatures, 12 states—California, Colorado, Connecticut, Idaho, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oklahoma, and Vermont—offer their versions of the child tax credit. Additionally, the child tax credit is now recoverable in nine out of the twelve states, including California, Colorado, Connecticut, Maryland, Massachusetts, New Jersey, New Mexico, New York, and Vermont. For more information, visit the website of your state’s government as eligibility and benefits differ by
  4. Recover missing payments: It’s not too late if you failed to submit a tax return in time to receive the second half of your credit in 2021. By completing Schedule 8812, you can reconcile any missing advance funds that they were anticipated to receive in
  5. File early and consult a professional: Professionals emphasize the value of getting started early to ensure that you have enough time to locate all of your documents and receive answers to your queries. You can get any returns you are entitled to sooner if you file your 2022 taxes as soon as possible.

If you are unsure how to properly file your taxes and understand what to do, do not hesitate to reach out

to Cots Law at (361) 866-3819 for advice on navigating your taxes in 2023.

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About Daniel T.A. Cotts

Daniel is a skilled Tax Attorney who moved to Corpus Christi in 2019 to expand his practice and return to Texas. With over 26 years of experience in the legal profession, Daniel brings a wealth of knowledge of Taxation, IRS Dispute representation & resolution, Estate Planning, Accounting, and Business & Contract Law to South Texas.


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