As part of a coronavirus alleviation package for 2021, major changes were made to the nation’s tax law. As a result, many US citizens received additional Child Tax Credit relief in the form of monthly payments of up to $300 per child.
The benefit was cut to $2,000 per qualifying child for the tax year 2022, and advance monthly installments of $300 were discontinued.
Child Tax Credit Changes
The Child Tax Credit is projected to remain at $2,000 per qualifying child for the 2023 tax year but without any upfront monthly payments. Due to a temporary change in the legislation, more families, including those without recent income, are now eligible for the Child Tax Credit and receive payments (CTC).
The CTC is a tax benefit paid to taxpayers with dependent children under the age of 17. In order to claim the credit on your tax return, you must demonstrate to the IRS that you and your kid satisfy specific standards.
After a certain maximum is reached, the credit decreases in increments, therefore you must additionally demonstrate that your income is below that amount. If your modified adjusted gross income exceeds the limit, your credit might be decreased or you could lose eligibility entirely.
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Who’s Eligible?
To qualify, parents must file taxes and fulfill residence and income requirements. Parents with children less than 16 on the final day of the year and who keep a principal residence in the United States for more than half the year meet the residency requirement.
Federal employees and military personnel stationed overseas are also eligible. The Child Tax Credit is subject to income requirements. A parent must have the following modified adjusted gross income (MAGI) in 2023 to be eligible:
Less than $200,000 for individuals filing as head of household, unmarried, or married but living separately. Less than $400,000 for married couples who file jointly.
The IRS advanced payment of a portion of the Child Tax Credit for a period of 2021. These advance payments were not expected to be made available in 2022 or 2023.
Although there are continuous political efforts to prolong the monthly payments, it does not appear that a change will occur in the near future.
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