Purpose of the Child Tax Credit Explained By A Nerd

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Humbled Budget Team

With over 55 years of combine experience in the Finance/Tax Industries based in the United States, Our Team of Humbled Individuals' shares their wisdom gained through experience or technical knowledge acquired through Additional Education.

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Question No:1: Purpose of the Child Tax Credit Explained By A Nerd

There are several methods for filing your taxes. Numerous factors to consider. Taxes. One of the most overlooked benefits is the Child Tax Credit, which can be worth up to $3,600 per child. Everything you need to know about it is right here critical benefit.

The Impact of the Child Tax Credit

You may be eligible for the Child Tax Credit in 2022 under these circumstances:

You’re a taxpayer.

You have a qualifying child under 17 or under 24 years old (enrolled as a full-time student).

The child was born in 2001 or later and doesn’t live with you. If your dependent is married, they must file their taxes.

The Child Tax Credit can help lower your tax bill, but it’s only worth $3,600 per child and hasn’t changed since 2001. (The $3,600 only applies if child is under 6, $3,000 under 17)

The IRS sets aside a certain amount of money each year to be used as refunds on this credit, so if there’s more demand than supply, you may not get your full refund right away; it could take several weeks after filing your taxes before it shows up in your account.

Qualifying for the Child Tax Credit

You may claim the child tax credit for your children. Children if they meet all of the following criteria:

The amount of your child’s tax credit under the age of 17.

They lived with you for more than half of the year.

They were dependent on you for over half of their support during that time.

If a child’s parents are divorced or legally separated, only one parent can claim the child as a dependent and receive this credit. The other parent may get it by attaching Form 8332 (PDF).

Determining the Child Tax Credit amount

The amount of your child tax credit you can claim is based on income and filing status.

If you have one qualifying child, you may be able to take up to $3,600 off your taxes owed.

If you have two qualifying children, the amount increases to $7,200.

Determining the Child Tax Credit amount

The amount of the tax credit you can claim depends on your income, how many kids you have, and whether or not they live with you all year. Here’s how it works:

The Child Tax Credit is not refundable. That is, if your total tax liability is more significant than your earned income plus the value of this credit, you won’t get any money back.

This makes sense because if you weren’t paying taxes, we wouldn’t need a refundable portion (which comes into play later).

You can determine what portion of this credit will be refundable based on how many children live with them for more than half of the year and whether or not those kids qualify for dependent exemptions.