The child tax credit is a tax benefit the federal government offers to U.S. taxpayers with children. Claiming a child tax credit family can decrease your overall tax liability or increase your tax refund.

What is the Child Tax Credit?

This credit reduces taxes owed for families with qualifying children. Each qualifying child can reduce your tax bill by up to $2000. Up to $1600 of the credit is refundable. This means that if your tax liability is eliminated, you could be refunded up to $1600 per child. The refundable portion of the credit is called the Additional Child Tax Credit.

Requirements to Qualify

Each child you claim the tax credit for must meet the following criteria:

• Age: They must be under 17 at the end of the qualifying year (2023).
• Relationship: They must be your daughter, son, foster child, stepchild, sister, brother, step-sister, step-brother, half-sister, half-brother or descendants of these relations (niece, nephew, grandchild).
• Citizenship: Your child must have a valid social security number and be a U.S. national, U.S. citizen or a U.S. resident alien.
• Dependent Claim: You must claim your child as your dependent in your tax return.
• Residency Status: Your child must have lived with you for at least half a year.
• Financial Assistance: You must have provided at least half of the child support during last year. Your child will not qualify if they support themselves financially for more than six months in the previous year.
• Parent or Caregiver Income: To qualify for the full credit, the income of the parent or caregiver must not exceed $200,000 or $400,000 if filing jointly. Your tax credit reduces incrementally if your income exceeds this threshold.

To learn more, visit the IRS website or speak with a tax professional.

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At Horizon we’re great at banking, but we’re not tax professionals! If you have questions about your specific tax situation, make sure to consult a tax expert.