In 2021, families qualifying for the Child Tax Credit saw a boost from $2,000 to $3,600 per child aged 5 or under and A$3,000 per child aged 6 to 17, however in 2023, these amounts will drop.
Prepare your 2022 tax returns as 2022 is coming to a close. Those preparing to file must be aware of IRS changes and updates. The Child Tax Credit for 2022 will be $2,000 per child for those who received $3,600 per child in 2021.
Child Tax Credit Changes
EITC recipients without children will receive $500 in 2022 as opposed to $1,500. In 2022, the Child and Dependent Care Credit declines from $8,000 to $2,100.
By the end of the year 2022, all taxpayers who have received more than $600 through third-party payment apps like PayPal and Venmo must have received a 1099-K. Part-time jobs, side hustles, and sales must all be included on tax returns.
This is a significant change from the previous year, when 1099-Ks were only issued for transactions exceeding 200 and $20,000, respectively, on third-party networks.
Since the pandemic, taxpayers have been able to deduct up to $600 for charitable contributions, but that deduction will end this year. Donations to charities are not deductible for filers claiming the standard deduction.
In 2022, the premium tax credit is temporarily expanded. The Inflation Reduction Act of 2022 could expand eligibility for clean vehicle credit.
Under the American Rescue Plan, the increased credit was returnable.
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Are There Changes in Qualifications?
This year, you must pass seven tests to qualify for the child tax credit: Age, relationship, support, dependant, citizenship, place of residence, and family income:
- Age: The child must have been under 17 years old at the conclusion of 2022.
- The child must be your biological child, stepchild, or foster child placed with you by a court or authorized agency. You may also claim your siblings, step-siblings, nieces, nephews, and grandchildren if they meet all other criteria.
- The child cannot have provided more than fifty percent of their own support in 2022.
- You must claim the child as a dependent on your tax return for 2022. On the IRS website, the requirements for claiming a child as a dependent are detailed.
- Citizenship: The child must be a citizen, national, or resident alien of the United States.
- The child must have resided with you for more than fifty percent of 2022. However, there are a number of exceptions for children born in 2022, temporary absences due to school, business, medical care, or military service, and children of divorced or separated parents.
- Family income: If your modified adjusted gross income (MAGI) exceeds certain amounts, the child tax credit is reduced. Child tax credit amounts for married couples filing jointly with a MAGI greater than $400,000 and individuals with a MAGI greater than $200,000 are reduced by $50 for every $1,000 earned in excess of those limits. In addition, families must have earned at least $2,500 in 2022 to qualify for the child tax credit.
The IRS states that parents can claim the child tax credit by listing their children and other dependents on Form 1040 and attaching a completed Schedule 8812, Credit for Qualifying Children and Other Dependents.
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