It was given that tax refunds would be lesser for the 2023 tax season. The average has so far been $2,933 this year, around 11% below the amount sent out by the federal government last year. And the reason was the absence of any federal stimulus check, most notably the expanded version of the Child Tax Credit stimulus check.
But some tax credits have expanded this year including the credit for electric vehicles and solar panels, which bring in $7,500 and 30% respectively.
Keeping yourself up-to-date on all the potential tax credits this year should substantially increase your tax refunds this year.
Getting Ahead Of The Tax Credit Payments Each Year: The Child Tax Credit Loss Could Still Be Compensated
Generally speaking, the tax credit is an amount of money that you can subtract dollar for dollar from any owed income tax. And for many low and moderate-income individuals or families, it could be the biggest single check that they could get every year.
One of the greatest success stories of the pandemic stimulus checks was the expanded version of the Child Tax Credit stimulus check that President Biden sanctioned immediately after assuming power as part of the American Rescue Plan Act.
Rarely has any government scheme elicited such a favorable response. While it was initially passed for one year in 2021, the model was to be expanded till 2025 and it would have been a success had not President Biden faced betrayal within his party. Senator Joe Manchin, backed by big corporations, put an end to the Child Tax Credit, or at least its expanded version by using his pivotal vote in a Senate split right down the middle.
The Child Tax Credit lowers the total tax owed by taxpayers on a dollar-for-dollar basis. And that comes as a better option than a tax deduction. A tax deduction eventually reduces the total taxable income and generally results in smaller savings for the taxpayer.
Without the support of the enhanced funds, the Child Tax Credit is a $2,000 per child tax benefit that is claimed by filing under Form 1040 and attaching Schedule 8812 to the return.
To be eligible for the credit stimulus check, the filer’s dependent must be below seventeen years and must have a Social Security number. In the tax year 2022, the full benefits of the CTC stimulus check were available to families whose income was $400,000 or less for joint filers and $200,000 for individual filers. It phased out with every increase in income above that level.
The Child Tax Credits are available for those families where the dependent child or children meet the following qualifications. They should be under the age of seventeen at the end of any tax year. They must also be a child, a foster or a stepchild, a sister, a stepbrother or stepsister, a half-brother or sister, or a descendant of any of the family members.
The child must also have lived with his parents for at least half of the year for which the payment is being claimed and must also have contributed less than 50% of his or her support expenses.
The child must also be claimed as a dependent on the parent’s taxes. The child also must not have filed a joint income tax return with a spouse. Or if they have filled it must have been done only to claim a refund of the estimated income tax paid. And finally, they must be an American citizen, national, or resident aliens.
The IRS has placed online a useful tool that helps filers decide if their child or dependent is eligible for the child Tax Credit stimulus check. The Child Tax Credits are not earned income. Therefore it will not have any effect on various government benefits that include unemployment insurance, SNAP, SSI, Medicaid, and Public Housing.
Claiming The Child Tax Credit
One thing that is clear for claimants of the Child Tax Credit is that the payments can only be claimed if you have filed your returns. Some people in the low-income category do not bother filing their returns as they do not fall in the tax bracket. But that could be a mistake when it comes to tax refunds.
This is because the IRS relies on the data of income tax filers to send out various tax refunds. Many families in this category miss out on many of the important benefits that they are eligible to receive.
One of the common complaints about the first two rounds of the stimulus checks was that they only catered to the middle and the rich while the low-income category citizens were left out as they were still to be added to the tax records.
But the most important issue is that such families are being denied some very important benefits that could substantially help out the filers and the homeless.
The child tax credit payments had a significant influence on poverty and policy. ever since it was enacted back in 1997, the Child Tax credit payments have been a boom for its participating members. But one of the harshest criticism has been reserved for its lack of support to the low-income citizens of the US.
There was an important implication as the CTC expanded during the pandemic. It proved beneficial for low- and moderate-income families. The emergency benefits included advance payment of the benefits for eligible filers.
The stringent effort was made by the federal administration to reach out to very low-income families. Such families do not normally file income tax returns owing to their low income. They were thus absent from the records of the IRS when it was time to disburse the payments. Consequently, they remained outside the perimeter of the payments till they were specifically invited by the IRS in the last quarter of 2023 to enter their name in the data and collect various stimulus checks including the economic impact payment, the Child Tax Credit, and the Earned Income tax credit payments. For those who have not yet filed their returns. The Child Tax Credit stimulus check has not ended. The earlier $2,000 payment will continue till a fresh round of legislation is initiated by the Democrats.
