Best Tax Credits for Parents & Families to Take Advantage of for 2023 Tax Filings

Latest News on Child Tax Credit

• A bipartisan bill that would extend the Child Tax Credit through 2025 has passed through the House Ways and Means Committee.  The bill has passed the House and a vote in the Senate is expected soon.   

• Broad support from a diverse coalition of elected and community leaders, including pro-life and pro-family advocates, are supporting this bipartisan bill.  US Conference of Catholic Bishops thank members of Congress for “renewed conversation and commitment on both sides of the aisle” in this effort.

• Proposal could immediately affect millions of families filing their 2023 taxes.  Over 36 million American families will benefit with greatest impact to children living below or near the poverty line.

Key Facts

• The American Rescue Plan Act of 2021 temporarily expanded the child tax credit for the 2021 tax year to $3,600 per child younger than age 6 and $3,000 per child up to age 17.

• The expanded child tax credit reached over 61 million children in more than 36 million households, and funds were primarily used for child care, food, housing and other basic needs.

• In 2021 child poverty fell to its lowest level ever in America.

• In 2022 Congress did not renew CTC expansion, child poverty surged by 41%.

Expansion of Child Tax Credit before Congress in 2024 has bipartisan support.  A broad coalition of conservative and pro-life faith and community leaders and progressive community based organizations have come together to support the bill.

As tax season approaches, many households facing high inflation are seeking tax credits and deductions to ease their financial burden. A variety of tax credits are available, and we have highlighted some of the most beneficial options below.

Changes to the Child Tax Credit

In 2021, President Biden signed the American Rescue Plan, and with it the One-Year Child Tax Credit Expansion, into law. The tax credit increased the credit to $3,000 per child ($3,600 per child under age 6) for many families. It made the credit fully refundable for families who lived in the U.S. for more than six months during 2021 and removed the $2,500 earnings floor. And it required half of the credit to be paid in advance by having the IRS send monthly payments to families from July 2021 to December 2021.

Unfortunately, Republicans and Senator Manchin let Biden’s one-year child tax credit expire at the end of 2021. Now families applying for the credit can only get up to $2,000 per child under the age of 17. And it is only partially refundable, which means that if the credit exceeds the amount of taxes you owe, you can receive a refund for the difference. A bill to expand the Child Tax Credit through 2025 has recently passed the House and is awaiting a Senate vote. If passed, it will apply to the 2023 tax season.

You can claim the Child Tax Credit by entering your children and other dependents on Form 1040, U.S. Individual Income Tax Return, and attaching a completed Schedule 8812, Credits for Qualifying Children and Other Dependents.

Child Care Credit

This credit can be worth up to 35% of the cost of child care, summer camp, or dependent care expenses, up to a maximum of $3,000 for one child or $6,000 for two or more children. The credit for child and dependent care expenses is nonrefundable, meaning the credit can't be used to increase your tax refund or to create a tax refund when you wouldn't have already had one.

Families must file a federal income tax return and submit Form 2441, “Child and Dependent Care Expenses.”

Earned Income Credit

This credit is designed to help low- and moderate-income taxpayers. The amount of the credit depends on your income and the number of children you have. Determine if you qualify with this quick survey.

Adoption Credit

This credit can be worth up to $14,440 for qualified adoption expenses. If you make under $223,410, you should qualify for the entire complete credit. Learn how to submit Form 8839 to take advantage of this tax credit.

Your family may be eligible for even more tax credits thanks to the Inflation Reduction Act! Learn More about the best tax credits it offers families here.

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More Information on the Expired 2021 Child Tax Credit

The American Rescue Plan Act (ARP) helped millions of families stay out of poverty. Enacted as part of the Covid-19 stimulus package in March 2021, the changes reduced child poverty from 15.8% in June to 11.90%, a decline of 3 million American children living in poverty, according to The Economist. An analysis by the Urban Institute also found that if this policy became permanent, it would “decrease child poverty 50 percent or more in 11 states.” Of the six states which would benefit the most, four are Republican leaning states like Texas, Mississippi, Louisiana and Florida.

The ARP also expanded the Child Tax Credit to include families who previously would have earned too low an income to receive the benefit. This change alone is estimated to have helped pull another 23 million children of color out of poverty.

Many economists are already saying that the American Rescue Plan Act will do more to protect our children than nearly every other policy over the last 50 years and has helped protect children's’ lives across the country.

A recent compromise would bring back an expanded Child Tax Credit through 2025, benefitting fifteen million children from low-income families.  The framework of this deal was made possible by a bipartisan coalition of pro-life and pro-family advocates and elected leaders, including the National Association of Evangelicals, United States Conference of Catholic Bishops, American Enterprise Institute, and the National Hispanic Christian Leadership Conference, among many others. In display of bipartisanship, the Child Tax Credit expansion passed the House 357-70. The bill now awaits a vote in the Senate.

Read More About the Impacts of the 2021 Child Tax Credit Expansion and How it Protected Kids Here.