Major changes close to being passed into law regarding the child tax credit:
The new rules would still require the refundable child tax credit to be based on work, however, the credit would be multiplied based on children.
For instance, for a very low income family with 3 children, with an income of $13,000:
Instead of receiving only $1575 for the child tax credit (13,000 - $2500 threshold x 15% = $1575), they would receive $1575 x 3 = $4,725.
This rectifies an inequity which occurred in the past, which caused higher earning families to get a much bigger refund.
The new reasoning is that as long as the parents are working and trying, it's not fair to penalize their credit just because they don't have a higher paying job.
This will majorly affect families with multiple children.
Technically, with an income of $15,000 or more, parents will receive the maximum of $1800 per child, for tax year 2023. Very attainable.
More changes: phased increase to the refundable portion of the child tax credit for 2023, 2024, and 2025: $1800, $1900 then $2000.
One-year income lookback: flexibility for taxpayers to use either current- or prior-year income to calculate the child tax credit in 2024 or 2025, similar to provisions on the 2020 tax return due to COVID-19.
Inflation relief: adjust the tax credit for inflation starting in 2024.
These changes are are result of a compromise between republicans and democrats.
These points aren't final, so it's still subject to change.
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