Child Tax Credit Modifications: Implications for Divorcing Couples

Parties going through a divorce often negotiate the child tax credit and dependency exemptions in either support or divorce court. The Child Tax Credit has been modified several times in the past few years and once again may be modified shortly and could be effective on your 2023 tax returns. The proposal would expand the child tax credit for low-income families and increase the maximum amount of the credit from $1,600 per child to $1,800 per child in 2023 and $1,900 per child in 2024 and $2,000 in 2025.

More importantly, the IRS would be directed to recalculate the credit on the 2023 returns if the taxpayer filed their return before the changes took place. The child tax credit also applies to children who are 0-16 years of age. To claim the child tax credit the child must live with you for more than half the year and they can’t be claimed as dependents. Taxpayers should be meeting with their accounts to file their returns and anticipate they could be entitled to a larger childcare adjustment for 2023.