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What tax credits are available to me as a new parent?

The Child Tax Credit is available to filers with one or more children. For 2023, the Child Tax Credit is available for children under the age of 17 on Dec. 31, 2023. A child born anytime during 2023 may qualify for the Child Tax Credit. 

Not all parents, however, are eligible. Parents must meet residency requirements and income limits before they can claim the Child Tax Credit on their tax return. 

The Child Tax Credit is worth up to $2,000 per qualifying child and is partially refundable, so a parent may benefit from the Child Tax Credit even if they had no tax liability.

Is the Child Tax Credit prorated if my child was born at or near the end of year?

The Child Tax Credit is not prorated. You may receive the entire Child Tax Credit for an eligible dependent, even if  your child was born on Dec. 31. You receive the same amount of Child Tax Credit as you would receive if the qualifying child was born on Jan. 1.

How do I claim the Child Tax Credit?

The Child Tax Credit is claimed by filing a Form 1040 individual tax return and attaching a completed Schedule 8812 to the tax return. The Child Tax Credit can be claimed for each qualifying child who has a valid Social Security number. 

To qualify, the child must be under 17 at the end of 2023. Generally, the child must live with you for at least half of the year and you must provide at least half of the child’s support during the year. There are a number of other requirements and a tax professional can help you assess your eligibility.

In addition to other eligibility requirements, there are income limits for claiming the Child Tax Credit. A qualifying parent needs to have the following modified adjusted gross income:

  • $200,000 or less for those who file single, head of household or married filing separately.
  • $400,000 or less for those who file married filing jointly.

When taxpayers exceed those income limits, the credit is reduced by $50 for each $1,000 of additional income above the threshold until the credit is eliminated completely.

What other tax deductions may I be eligible for as a parent?

The Earned Income Tax Credit (EITC) is a refundable credit available to low- and moderate-income workers. The EITC can be as large as $7,430 for tax year 2023. Eligibility depends on a number of factors including your filing status, your earned income, your investment income, and the number of dependents you claim on your tax return.

The Child and Dependent Care Credit is available for taxpayers that paid expenses for the care of their children so that the taxpayer could work or look for work. If you are married, your spouse must have also been working or actively looking for work. This credit is typically not available for taxpayers that file married filing separately.

If you, your spouse, or a dependent studied at an eligible educational institution during 2023, you may be able to receive education credits on your tax return. Depending on your situation, you may qualify for either the American Opportunity Tax Credit or the Lifetime Learning Credit.

There is a federal adoption credit of up to $15,950 per child for adoptions that are completed during the 2023 tax year. This tax credit is not refundable, meaning that it can only be used to reduce income tax liabilities. If the credit is not completely used during the tax year, the credit can be carried forward for up to five years.

Can I amend a prior year’s tax return if I forgot to claim the credit? 

Yes, you can amend a prior year’s tax return if you did not claim the Child Tax Credit on the original tax return. There are some limitations, however. Generally, an amended tax return must be filed within three years of the originally filed tax return or within two years of when you paid any tax due, whichever is later. If you filed your tax return before the due date, then your tax return was filed on the due date for purposes of calculating the three-year period.

In most cases, you should wait until your original tax return has been processed before you file an amended return. If the IRS begins processing your amended return before they process your original return, it may cause delays.

It can be difficult to know which credits you qualify for and how to claim those credits on your tax return. Leaning on a tax pro can save you both time and money, and give you peace of mind. Rocket Tax™ can match you with a tax pro who understands your situation and can prepare and file your return for you. Don't do your taxes™ – Let us do them for you.  

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

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