$2,000 Child Tax Credit 2022: Who is eligible for the payment?

The Child Tax Credit in 2023 will continue at the same level offered before the expansion of the credit through the American Rescue Plan.

The amount of the credit is lower and the eligibility is more restricted than in 2021, due to the rules established through the Tax Cuts and Jobs Act of 2017 (TCJA). These changes will be in effect until fiscal year 2025 if Congress does not modify the credit before that date.

In 2021, the ARP made big changes to the one-year credit that helped many families by allowing them to receive half the value of the credit for six months instead of a lump sum when they file their taxes. The remaining half of the credit was then claimed when you filed your tax return, increasing the number of total returns processed by the IRS.

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Like last year, taxpayers with eligible children can claim a credit of up to $2,000 per child. This year the credit is partially refundable and there is an income threshold to start claiming the credit. portion of up to $1,400 known as the “Additional Child Tax Credit.”

Taxpayers who owe less tax than the refundable amount will have it added to their tax refund, and the non-refundable portion will reduce the taxes owed dollar for dollar.

Which children are eligible for the 2022 Child Tax Credit?

The 2023 Child Tax Credit is available to parents with dependents under the age of 17 as of December 31, 2022 and who meet certain eligibility requirements. Under the enhanced credit, 17-year-olds were eligible for the much larger full amount of the 2021 Child Tax Credit.

For fiscal years 2022 through 2025, the child must be eligible to be claimed as a dependent on the taxpayer’s return and live at the same residence as the taxpayer for more than half the year. The child cannot provide more than half of their own financial support during the tax year.

The child must have a valid taxpayer identification number in the form of a work-authorized Social Security number (SSN). Before the TCJA and in the 2021 enhanced version, taxpayers could claim children with Individual Taxpayer Identification Numbers (ITINs) issued by the IRS, not the Social Security Administration. This meant that documented immigrants and permanent residents could also claim the credit.

Taxpayer income requirements to claim the 2022 Child Tax Credit

Parents of eligible children must have a adjusted gross income (AGI) of less than $200,000 for single taxpayers and $400,000 for married filing jointly to claim full credit. For each $1,000, or fraction thereof, above those thresholds, credit is reduced by $50.

For low-income Americans, they must have an income of at least $2,500 to be eligible for the refundable portion of the credit. The amount that can be claimed is a portion of the winnings above that threshold. To calculate how much you can claim, you need to subtract $2,500 from your “earned income,” for example, Social Security benefits and unemployment compensation don’t count, and then multiply that number by 15 percent.

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