 Most of this information comes from instructions for schedule 8812 credits 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 where the credits are located. Remembering the first half of the income tax formula is in essence and income statement although a strange one the bottom of it resulting in taxable income similar to net income for an income statement we use that to calculate the tax before credits or other taxes not by multiplying by one rate but by using the progressive tax system and then we have to deal with the credits and other taxes like self-employment tax and the payments that we have made either through withholdings or estimated tax payments to get to the tax refund or tax due bottom line remember the credits are similar to deductions in that we like them both however if we could choose between one dollar of credit and one dollar of deduction we typically want the one dollar of credit because we get the full benefit for the one dollar of credit whereas a one dollar deduction would simply be reducing the taxable income by that dollar and the benefit would be dependent on our tax rate remember that in terms of the form 1040 we're looking at page two of the form 1040 page one deals with the basic weird income statement of the income tax formula to get to the taxable income page two deals with the credits and the payments where we might have many credits including this one a refundable portion and a non refundable portion so we have one kind of credit category that's now basically being being broken out into two places on the tax return because of this concept of it being refundable and part of it being non refundable the non refundable part means that it can't take the tax liability below zero if it does you'll basically lose the credit for anything that goes past that point the refundable portion giving you a benefit even if the tax liability goes below zero all right general instructions taxpayer identification number requirements you must have a tin by the due date of your return so if you or your spouse is filing jointly do not have an SSN social security number or itin issued on or before the due date of your 2022 return including extensions you cannot claim the ctc child tax credit odc other dependent credit or actc additional child tax credit on either your original or amended 2022 return if you apply for an itin on or before the due date of your 2022 return including extensions and the irs issued you an itin as a result of the application the irs will consider your itin as issued on or before the due date of your return quite considerate of them so how much is the 2022 child tax credit so for the 2022 tax year the ctc child tax credit is where $2,000 per qualifying dependent child if your modified adjusted gross income is 400,000 or below married filing jointly or 200,000 or below all other filers if your MAGI remember when we think about these phase outs it usually starts with the AGI which is your adjusted gross income the M is the modified adjusted gross income so if your MAGI exceeds those limits your credit amount will be reduced by $50 for each 1000 income exceeding the threshold until it is eliminated so when you're discussing the child tax credit with people you could basically give the general concepts $2,000 it would change substantially in 2021 it's basically reverting back to its original format after the crisis and whatever the reason was for the adjustment in 2022 and then there's going to be an income limit that's fairly it's a fairly high income limit and then oftentimes you'll be able to say look at phases out once you get past that limit and you probably don't need to actually know exactly what the phase out is in your mind possibly depending on the software to do that because your job might be to discuss this visualize this plan for this and so on so that you can you can talk to people and make projections and then when you get down to the nitty gritty of doing the actual phase out you can have the software help you out with that process so there is that so the CTC is also partially refundable tax credit that is it can reduce your tax bill on a dollar for dollar basis and you might be able to apply for a tax refund of up to $1,500 for anything left over so in other words the refundable portion and the non-refundable portion the non-refundable portion means most credits the concept is this is a tax so we're talking about federal income taxes so it shouldn't be the case you would think for a credit to result in the liability going below zero and you still getting money from the credit when you don't owe any taxes right that would be so that wouldn't be a tax but we can use the tax code as like a benefit program and not just for taxes which is in essence what's being done with the refundable portion of the credit allowing people still to get a quote refund in quote which isn't really a refund it's a benefit program at that point because it's not really taxes because you're getting a refund on on the refundable part and that's why it gets a little bit messy on the second page of the tax return because now we've got to think about well how are we going to do that logistically calculating the non- refundable portion that can't takes the liability below zero and then the refundable portion which can the refundable portion acting kind of like a payment in essence like like it meaning you're going to get a dollar for dollar benefit uh generally from it even if your tax liability goes to zero or pass zero so this partial refund portion is called the additional child tax credit by the IRS that's why we have these two terms so when you normally talk to people you say yes the CTC is the child tax credit 2000 whatever and then when you get into the refundable portion you most people probably still say CTC child tax credit but the additional child tax credit is what's being referred to when we get to this to this refundable portion that you're breaking out in these two categories okay each qualifying child must use the CTC or ACTC child tax credit additional child tax credit must have the required social security number so if you have a qualifying child who does not have a required SSN social security number you cannot use the child to claim the CTC child tax credit or additional child tax credit on either your original or amended 2022 return the required SSN social security number is one that is valid for employment and is issued before the due date of your 2022 return including extensions if your qualifying child was born and died in 2022 and you do not have an SSN for the child attach a copy of the child's birth certificate death certificate or hospital records the document must show the child was born alive so each dependent you use for the ODC other dependent credit must must have a TIN by the due date of your return so when we think about the credits that are going to be taken here generally the thought process would be could you get the child tax credit if you cannot get the child tax credit could you get the other dependent credit and this is where it kind of ties into the idea of a dependent normally of course when you're thinking about a dependent someone that you're going to put on your return as a dependent you are getting a benefit from that primarily the first thing that comes to mind would be the child tax credit if they qualify for the child tax credit but if they don't qualify for the child tax credit then you may be able to get the other dependent credit and therefore these two credits are kind of are kind of linked together because they're basically attached to someone who might qualify as a dependent so we have a similar kind of requirement you got to have the TIN by the due date of the return for the other dependent credits so if you have a dependent who does not have an SSN social secured number I-10 or A-10 issued on or before the due date of your 2022 return including the extensions you cannot use that dependent to claim the ODC on either your original or amended 2022 return if you apply for an I-10 or A-10 for the dependent on or before the due date of your 2022 return including the extensions and the IRS issues an I-10 or A-10 as a result of the application the IRS will consider the I-10 or A-10 as issued on or before the due date of your return