Child Tax Credits Have Changed in 2023 — Here's What to Expect
For the 2022 tax year, those enhanced child tax credits are returning to the levels they were in 2019 before the COVID-19 pandemic in 2020.
Jan. 27 2023, Published 12:14 p.m. ET
In 2021, parents got a boost on their tax returns due to a temporary increase in the Child Tax Credit (CTC) and the Child and Dependent Care Credit, thanks to President Joe Biden’s American Rescue Plan.
But if you think you’ll get the extra credit on your taxes in 2022, think again. For the 2022 tax year, those tax credits are returning to the levels they were in 2019 before the COVID-19 pandemic in 2020.
How much do you get back in taxes for a child in 2023?
When you file your 2022 taxes this year, you’ll only get a maximum of $2,000 tax credit per qualifying child. That’s $1,600 less than last year when parents could get up to $3,600 per dependent due to the American Rescue Plan.
The child tax credit for 2022 is also applied when you do your taxes in 2023 and isn't doled out in monthly stipends like it was for the 2021 tax year.
Child and dependent care tax credits will be reduced in 2022.
The Child and Dependent Care Credit has also been reduced in 2022. This is a tax credit that is meant to help with the costs of enrolling a child under age 13 in child care, after-school programs, summer camp, or for babysitter expenses.
For 2022, parents can receive up to $2,100 for the Child and Dependent Care Credit, which is significantly lower than the $8,000 tax credit allowed in 2021.
Biden tried to extend the 2021 enhanced child credits.
President Biden and the Democrats in Congress tried to extend the higher tax credits for parents. Biden’s Build Back Better Act included a proposal to extend those credits. However, an agreement on the plan couldn’t be reached with Republican lawmakers before Congress adjourned in December.
Who qualifies for the child tax credits?
To qualify for the Child Tax Credit, you must have a dependent child who was under the age of 17 throughout 2022. This is also a change from the 2021 enhanced child tax credit, which bumped the eligibility age to children under 18.
The dependent can be a biological child, stepchild, or foster child. You may also qualify for the credit if the dependent is a sibling, half-sibling, or any of their descendants, like a niece or nephew. The dependent child must live with you for at least half the year and rely on you for financial support for at least half the year.
The maximum credit of $2,000 per qualifying child starts to phase out if you have a modified adjusted gross income (AGI) over $200,000 for a single taxpayer or $400,000 for a married could filing jointly.
To qualify for a tax credit for your child and dependent care expenses, you must have an AGI of $125,000 or below to receive up to 50 percent of your care-related expenses. For taxpayers earning over $125,000, there is a sliding scale on how much credit you may qualify for.