Having kids comes with many financial implications, including how it affects your taxes. As you prepare to file your 2023 tax return, here are 4 key things you need to know
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Child Tax Credit Reset
01.
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During the COVID-19 pandemic, the Child Tax Credit was temporarily expanded to provide greater financial relief to families.
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However, the credit has reverted to its pre-pandemic amount of up to $2,000 per child under age 17.
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This nonrefundable credit can reduce your overall tax bill on a dollar-for-dollar basis.
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Child and Dependent Care Credit
02.
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If you paid for daycare, after-school programs, summer camps or other qualifying care for your child under age 13 in 2023, you may be eligible for the Child and Dependent Care Credit.
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This can enable you to claim up to $3,000 for one child or $6,000 for two or more children to offset a portion of these expenses. Limits apply based on your income level.
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Potential Child Tax Credit Expansion
03.
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Congress is considering legislation that would once again temporarily increase the Child Tax Credit amount for 2023 and make it fully refundable.
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However, the outcome and timing of this potential expansion remains uncertain as of early 2024.
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You should file your 2023 return on time, and the IRS will automatically adjust credits if changes occur.
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Claim Dependents Properly
04.
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To claim your child as a dependent on your 2023 taxes, you must provide their Social Security number.
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All children must have a Social Security number to be listed as dependents, so be sure to obtain one for any new additions to your family before filing season.
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