Good morning/afternoon/evening/top of the morning to you! Regardless of the time of day, this is one of those questions that could be on the top of your mind. Recently i have been seeing snippets of articles and news stories saying people should "wait to file" their 2023 taxes until February in an effort to be able to claim this new $3600. The question is "is this true or false?"
The answer is BOTH! So, let's start with the "did the Child Tax Credit (CTC) get raised for 2023. The truth of the matter is not yet. Congress is currently in talks and negotiations in an "attempt" to raise the CTC. It has not been approved as of yet, but they are really trying! Right now the conversation is that IF they get it approved, it will take affect for the current year. The IRS will provide a way that even if you have already filed and it is approved that you will still qualify for it...you will not just lose it because you have already filed. Let's just say your return has been filed and accepted and is in processing....then you will just file and amendment and get the difference in a second payment. The big thing to know is that they are trying to get this resolved before January 29th so that any returns can be adjusted prior to IRS approval.
If they get it approved will I automatically qualify for the full $3600? This is another question that people are asking quite a bit. Remember in 2022 when they gave the one year bump in CTC so that children of a certain age would be able to qualify for the full $3600 and other qualified for $3000? NOTHING is set in stone as they are still negotiating, but we believe it will be this same type of situation...and then that begs the question is it fully refundable.
Many people do not understand what "fully refundable" means and a ton of times tax preparers will not take the time to explain the meaning. Let me give you a quick reference and hope that it helps...if not just reach out and i can go over it one on one with you! Right now only a portion ($1600) is able to be "refunded" to you. This means that the 1st part of the credit goes to reduce any tax that you may owe, and the left over amount of the credit can be given back to you...to boost your refund. So the credit is "partially" refundable because only part of it is able to be given back if your tax liability is zero. FULLY refundable would be you receiving the entire $2000 (current amount) even if you did not have any tax liability. Also, the credit is tied to the amount of "earned income" so if you did not have any income that you "earn" or "work" for, then you may not be able to get any of the credit.
If approved and if the credit becomes "fully refundable" then even if you have no earned income you will be able to receive the entire credit!
So in a nutshell, NO you do not need to wait to file in order to receive the credit if it is approved. Many persons file early because they need/want their refund...and if you receive these credits you will not physically receive the Earned Income credit until after February 15th anyhow...(that's like a law now)...so if you wait until February to start filing then you are going to be waiting until March before getting a refund.
I will try and keep some updates going as more information is released! As always, THANK YOU for being the best part of Authority Accounting! YOU are the BEST part of us!
Cordelia and Staff!
Here is an article to read if you have time!