 Most of this information comes from the instructions for Schedule 8812, Credit for Qualifying Children and Other Dependents, Tax Year 2022. You can find on the IRS website, irs.gov, irs.gov. Looking at the income tax formula, we're down at the bottom of the income tax formula when dealing with the credits. Let's recap the income tax formula here. Remember the first half of the income tax formula is in essence an income statement, although a strange one, where we have income. We have the above the line deductions, which you can call adjustments to income, to give us that very important subtotal adjusted gross income or AGI. It being important because oftentimes when we look at credits and deductions, they might phase out when income levels go up and that phase out is usually not based on the top line of income, but rather on the adjusted or AGI number. So then we're gonna subtract out the greater of the standard or itemized deduction to get us to the taxable income, which is kind of similar to net income of a normal income statement. So this is kind of like the bottom line of the normal income statement format or part of the income tax formula. Unlike with a normal income statement, we want taxable income as low as possible, as opposed to normally with net income, we want it as high as possible because we're gonna be applying the tax to this, not with one tax rate, but with the progressive tax system, the tables often using software to help us do that, to get to the tax before credits and other payments. Now you would think we're close to the end right here, but we're not really, because we still have a lot that we have to be dealing with, one of those being the credits. So we have credits, which some of which are gonna be refundable, so may not be refundable tax credits that we will have to be dealing with. The credits are similar to the deductions in that we as taxpayers like them, but if we had a dollar credit versus a dollar deduction, typically we would want the credit because the credit will give us that full dollars worth of benefit, whereas if we had the dollars worth of deduction, it would simply decrease the taxable income by a dollar and therefore only give us a benefit that would be proportional to the tax rate that we have, as opposed to the credit, where we would get that full dollar of benefit, which could be contingent still on whether it be refundable or non-refundable. So when we think about refundable or non-refundable, the credits that are non-refundable are the ones that if we have a tax liability that goes below zero, we're not gonna get the benefit of the credit because we don't owe any taxes, but the refundable credits are those that will give us a benefit even though we don't owe any taxes. So we get a quote, refund, end quote, even though we don't have a tax liability, right? And so we have to deal with the credits down here. We also have to deal with other taxes that are gonna be calculated. We calculated up top the federal income tax, but you might have like self-employment tax, for example, that we also have to deal with if you have a small business. And then that's gonna give us our total tax, which is a little bit deceiving of a subtotal here because we took into consideration these credits, which are like different than deductions and we have the other taxes that are imposed. And then we're gonna compare that. Usually you would think, well, can't I just finally compare that to the payments I've made with my withholdings or my estimated tax payments to get to the tax refund or amount due? But we also have to muddy this lineup with the refundable credits. So we have a different section for the refundable credits to be able to show and calculate those credits that act as payments in that they're not gonna be stopped even if the tax liability goes below zero, you're still gonna get a benefit from them. So preferably if you had a decision on which category of credit, you'd like the refundable credit, especially if you're on the low income side of things because it's likely then that even if your tax goes to zero, you'll still get a benefit from that credit. And then finally, we get the tax refund or tax due. Okay, so we're looking at the tax form. We're focused on the tax and credit second page of the form 1040. And we're looking here line 19, child tax credit or credit for other dependents, schedule 8812. And then on the payment side, we have the refundable side of the credit, additional child tax credit from schedule 8812. All right, so what's new with this one? So notice that when we had the whole COVID thing, the IRS was attempting or the government was attempting through the IRS to try to put money into the economy. We saw that with of course the stimulus payments and they also adjusted some of these refundable credits, one of the big ones being the child tax credits. So we have a lot of fluctuation happening with some of these credits and they're gonna have to pull back at this point in time. In my opinion, because of course, putting all that money out there causes inflation, which I think is actually gonna be more detrimental to lower income people, in my opinion, in the longterm than it was beneficial in the short. But we'll see how that plays out. In any case, they're gonna start reeling these things back in to go back to kind of a sustainable level, I think is, and so we're gonna have to see this fluctuation take place. So, child tax credit enhancements have expired. So many changes to the CTC, which is gonna be the child tax credit abbreviation, for 2021 implemented by the American Rescue Plan Act of 2021 have expired for tax year 2022, the enhancement of credit allowed for qualifying children under age six and children under age 18 has expired. So they didn't renew that, which would be amazing if they did because that was a big change or difference, which was argued to be a change that was for, you know, that the recovery period or whatever. So for 2022, the initial amount of the CTC child tax credit is $2,000 for each qualifying child. So the credit amount begins to phase out where modified adjusted gross income, so now it's got a phase out based on not the top line income level, but the HCI modified adjust gross income exceeds 200,000, 400,000 in case of joint return. The amount of the CTC child tax credits that can be claimed as a refundable credit, meaning it will take your, even if your tax liability is zero, you'll still get a benefit, which makes it not a refund really, even though it'll still be called a refund, but really it's kind of a benefit program in that case because you're not paying taxes, they're using the tax code to have like a benefit program in place with some of this refundable component. So it's limited as it was in 2020, except that the maximum ACTC, which stands for the additional child tax credit will get into some more of these terms in future presentations. Amount for each qualifying child increased to 1,500. The increase age allowance for a qualifying child has expired. A child must be under age 17 at the end of 2022 to be a qualifying child.