What parents need to know about the Child Tax Credit this year

A new year is here and with it comes a vision of warmer temperatures, spring days ahead…and taxes. Benjamin Franklin once wrote that, “In this world, nothing is certain except death and taxes.” And while that might be irrevocably true, you can be prepared for the certainty of taxes this spring– especially if you’re a parent or guardian of a child. For parents, there might be a glimmer of hope in one of the only perks of taxes as a parent — the Child Tax Credit (CTC).

Age and residency matter

In order to qualify for the Child Tax Credit, your child must be a dependent under the age of 17 at the end of the year. They also must possess a Social Security number and be a U.S. citizen, national or resident. 

Additional requirements, according to the IRS, include:

• They’ve lived in your home for more than half the tax year. (There are exceptions for children who are born or die during the year, along with dependents who split their time between parents due to divorce or separation. A Schedule 8812 is needed and instructions for that form can be found here.)
• The child is your son, daughter, legally adopted child, stepchild, or eligible foster child. Brothers, sisters, step siblings, half-siblings, nieces, nephews, and grandchildren are also eligible for the tax credit, assuming they meet requirements.  
• They are claimed as a dependent on your tax return or Form 1040.
• The dependent does not provide more than half of their own financial support during the year.

Child Tax Credit Amount

The maximum Child Tax Credit amount is $2,000 per qualifying dependent. Keep in mind that this tax credit is not fully refundable, which means you won’t get the full amount per child as a tax refund. The refundable portion of this year’s tax credit is $1,600. If your gross income exceeds $200,000 for single filers or $400,000 for Married Filing Jointly, the amount decreases $50 for every $1,000 your gross income is above the specified limits. But, this can still be a serious relief as the costs of those dang yogurt tubes continue to skyrocket.

Claiming a Child for Child Tax Credit

To receive the Child Tax Credit, you must list the child or dependents on your 1040 Form, otherwise known as the U.S. individual income tax return. A completed Schedule 8812 must also accompany your 1040 Form to properly identify the tax credit you are eligible for.

Taxes can be daunting and equally confusing, so if you have questions about your eligibility or the tax credits available to you, it’s important that you talk with a tax professional. They have the wisdom to help navigate you through tax filing season so you can get back to envisioning spring–without visions of the IRS knocking at your door.