Raising kids is expensive, but at tax time, they can help put money back in your pocket! The Child Tax Credit (CTC) is a valuable tax break designed to reduce the financial burden of raising children while lowering your overall tax liability. If you have qualifying children, you could be eligible for thousands of dollars in tax savings—but many taxpayers overlook key details that could affect their eligibility.

At Basso & Guida, we’re here to help you navigate tax credits and deductions, ensuring you get the maximum refund possible. Let’s break down everything you need to know about the Child Tax Credit, including how much you can claim, who qualifies, and how to ensure you get the full benefit.

1. How Much is the Child Tax Credit Worth?

For the 2023 tax year, the Child Tax Credit provides up to:

• $2,000 per qualifying child under the age of 17
• Up to $1,600 of the credit is refundable, meaning you can receive it even if you don’t owe taxes

If you qualify, the credit directly reduces your tax bill dollar-for-dollar—so if you owe $5,000 in taxes, a $2,000 Child Tax Credit would bring your balance down to $3,000. If your credit exceeds your tax liability, you may be eligible for the Additional Child Tax Credit, which allows you to receive a portion of the credit as a refund.

2. Who Qualifies for the Child Tax Credit?

To claim the Child Tax Credit, both you and your child must meet certain criteria:

✅ Age Requirement: The child must be under 17 years old at the end of the tax year.
✅ Relationship Test: The child must be your son, daughter, stepchild, foster child, sibling, half-sibling, or a descendant (such as a grandchild or niece/nephew).
✅ Support Test: The child cannot provide more than half of their own financial support during the year.
✅ Residency Test: The child must have lived with you for more than half the year.
✅ Dependent Status: You must claim the child as a dependent on your tax return.
✅ Citizenship Test: The child must have a valid Social Security Number (SSN) and be a U.S. citizen, U.S. national, or U.S. resident alien.
✅ Income Limits:

• The full $2,000 credit is available for single filers earning up to $200,000 and married couples filing jointly earning up to $400,000.
• The credit phases out for taxpayers earning above these thresholds.

Pro Tip: If your income is above the phase-out limit, you may still qualify for a partial credit. Talk to your accountant to determine how much you can claim.

3. What if My Child Turns 17 This Year?

Unfortunately, the Child Tax Credit only applies to children under age 17. If your child turns 17 before the end of the tax year, you may not qualify for this credit—but you could still be eligible for the Credit for Other Dependents, which provides up to $500 per qualifying dependent.

4. How Do I Claim the Child Tax Credit?

Claiming the Child Tax Credit is simple if you qualify. When filing your tax return:

• Include your child’s name, Social Security Number (SSN), and relationship to you on Form 1040.
• Your tax software or accountant will calculate the credit based on your income and number of dependents.
• If your credit exceeds your tax liability, you may need to complete Schedule 8812 to claim the refundable portion.

5. Common Mistakes to Avoid When Claiming the Credit

🚫 Forgetting to include a valid Social Security Number. Every child you claim must have a valid SSN issued before the tax return’s due date.
🚫 Claiming the credit for a child who doesn’t meet residency requirements. Your child must have lived with you for at least six months of the year.
🚫 Not adjusting for income limits. If your income is over the threshold, your credit amount may be reduced—make sure to check before filing.
🚫 Misunderstanding the refundable portion. Just because you qualify for the full $2,000 credit doesn’t mean you’ll get a full refund—only up to $1,600 per child is refundable.

6. Other Tax Credits for Parents to Consider

In addition to the Child Tax Credit, parents may qualify for other valuable tax breaks, including:

• Earned Income Tax Credit (EITC): Available to low- and moderate-income families, this credit can provide thousands in additional savings.
• Child and Dependent Care Credit: Helps cover childcare expenses if you pay for daycare or babysitting so you can work.
• 529 Plan Deductions: Some states offer tax deductions for contributions to college savings accounts for your child.

Final Thoughts: Don’t Miss Out on Valuable Tax Savings!

The Child Tax Credit is one of the most significant tax breaks available to parents, and if you qualify, it could put thousands of dollars back in your pocket.

At Basso & Guida, we help families maximize their tax benefits and ensure they claim every credit available. If you’re unsure whether you qualify for the Child Tax Credit—or if you’re missing out on other deductions—let us help!

📞 Schedule a Consultation today and let’s make sure your family gets the tax savings it deserves!