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Overview of Tax Credits
Earned Income Tax Credit (EITC)
Child Tax Credit (CTC)
Child and Dependent Care Credit (CDCC)
Recovery Rebate Credits and Economic Impact Payments (Stimulus Payments)
What are tax credits?
Tax credits can help reduce the amount of income tax you owe. Some tax credits are refundable tax credits, which can increase your tax refund amount if you owe less than the credit amount. Examples of refundable or partially refundable tax credits include the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), Child and Dependent Care Credit (CDCC), New York State Child and Dependent Care Credit (NYS CDCC), and the New York City Child Care Tax Credit (NYC CCTC).
How will tax credits affect my other public benefits?
In most cases, claiming tax credits does not affect eligibility for benefits like the Food Stamp Program (SNAP), Supplemental Security Income (SSI), Medicaid, Temporary Assistance for Needy Families (TANF), or public or subsidized housing. These credits are not considered income when determining eligibility for these programs, but they may be counted as a resource for some programs if the money is not spent within a certain time frame.
How can I claim tax credits?
You must file your federal and New York State tax returns. If your family earned $80,000 or less or you’re a single filer who earned $56,000 or less in 2022, you may qualify for NYC Free Tax Prep to file for free and keep your whole refund. For more information, go to nyc.gov/taxprep or call 311 and ask for tax preparation assistance.
IRS Refund Delay and Alert about “Early Refund” Products. The IRS must temporarily hold refunds for filers who claim the EITC or ACTC. Beware of paid preparers that advertise “express refund advances” or “refund anticipation checks,” which cost a lot and lower your refund amount. Remember: No one can give you immediate access to your tax refund
What should a family without a permanent or reliable address do to receive their refund including tax credits?
Families can receive their refund, including any tax credits, by direct deposit or by mail.
Direct deposit, an electronic payment made directly into your bank account, is the fastest safest way to receive payments. An NYC Financial Empowerment Center counselor can help you open a safe and affordable bank account, including those that accept IDNYC, if you don’t have one. Book an appointment at nyc.gov/TalkMoney.
Families can also use the address of a trusted relative or friend or a shelter or drop-in center to receive their refund by mail.
What is the Earned Income Tax Credit (EITC)?
The EITC is a federal, state, and New York City tax credit for qualifying families, noncustodial parents, and individuals who work full time or part time or are self-employed. On average, most eligible New Yorkers receive $2,400 in combined EITC benefits. The combined credit can be worth up to $11,000.
Who can claim the federal Earned Income Tax Credit (EITC)?
Basic requirements to qualify for EITC:
What is the New York State Earned Income Tax Credit?
This is a state credit similar to the federal version (see above). The New York State credit is generally worth 30% of the federal credit. However, New York State has decoupled from federal changes made to the Internal Revenue Code. Because of this, eligibility for the state credit is based on your recomputed federal adjusted gross income (FAGI) – a different calculation than used for the federal credit. For more information, visit New York State Department of Taxation and Finance.
Noncustodial Parents (Married or Single) who are up to date on their child support payments may be eligible for the New York State credit. Visit the New York State Department of Taxation and Finance for more information.
What is the New York City Earned Income Tax Credit?
In tax year 2022, the New York City EITC is increasing, shifting from a 5% cap of federal EITC levels to 10% to 30% depending on filers’ income. Like the New York State EITC, this credit is based on your recomputed federal adjusted gross income (FAGI) – a different calculation than used for the federal credit. For more information, visit New York State Department of Taxation and Finance.
Under the City’s expansion of the EITC, a single parent with one child with an income of $14,750 will see the benefit increase from $187 to $933—a 400 percent increase. A married couple with two children and an income of $25,000 will see their New York City benefit increase from $308 to $925 under the City payment—a 200 percent increase. The expansion of EITC will help 800,000 New Yorkers who qualify to better afford essential items like food, rent, and utilities.
Families with incomes below $5,000 are eligible for the maximum expanded NYC EITC.
What is the Child Tax Credit (CTC)?
The Child Tax Credit (CTC) is a federal tax benefit that helps families afford the everyday expenses of raising a child. After temporary changes in place for tax year 2021, the CTC has returned to its earlier structure. In tax year 2022, the CTC is worth up to $2,000 per qualifying child under 17 when you file your taxes in 2023. No advance payments of the CTC were made for tax year 2022. The CTC is refundable for up to $1,400, but no longer fully refundable as it was in tax year 2022.
If you were eligible and did not receive your tax year 2021 CTC, you can still file or amend a tax year 2021 return to receive this credit.
Who is eligible for the Child Tax Credit?
The tax year 2022 Eligibility Requirements include:
How did the advance CTC payments work in 2021?
Families were eligible to receive monthly advance payments of their total estimated 2021 CTC between July and December of 2021. These payments were 50% of the credit value split into equal monthly payments. For example, if your total credit value was $3,600 you would have received half or $1,800 in six monthly payments of $300. The estimated 2021 CTC value was based on information the IRS already had on file, either your 2020 or 2019 tax return or any updates you made in the IRS CTC Update Portal.
These advance payments have ended. However, if you did not receive all the funds you were entitled to, you can still claim the full CTC value when you file your tax year 2021 return.
Important: If you were sent advance CTC payments, you were also sent IRS Letter 6419, 2021 advance CTC. You should save this letter and make sure you have it when you file your tax year 2021 return. Please note that a small number of these letters may have included the wrong payment amounts. If you believe this includes you, the IRS encourages you to rely on the amount of payments reflected in your Online Account on IRS.gov. You can get help with this at an NYC Free Tax Prep site.
Is it possible I’ll have to pay back any of the advance CTC payments?
If your family received more money in advance CTC payments than you should have, you may have to pay a portion of this back to the IRS. When you file your tax year 2021 return and claim the CTC, your preparer can help determine if this is the case.
For parents with low incomes, below $40,000 on a single return, $50,000 on a head-of-household return, and $60,000 on a joint return, $2,000 of the amount paid per child will be protected and will not have to be repaid. The protection on repayment phases out for those earning more than $80,000 on a single return, $100,000 on a head-of-household return, and $120,000 on a joint return. In between these incomes levels you will receive partial protection from repayment.
Do parents need a Social Security Number to get the Child Tax Credit for their family?
No, you do not need a Social Security Number. You may file or use the IRS Non-Filer portal with an Individual Taxpayer Identification Number (ITIN). However, the children you are claiming must have a social security number to be eligible.
If you do not have an ITIN, get help applying for one at select NYC Free Tax Prep sites.
Can parents who share custody of a child both get the Child Tax Credit?
No. Only one parent can claim a child for the Child Tax Credit (and on their tax return). Whoever the child lives with for the majority of the year, or more than six months, is the parent or caregiver who should claim the child.
If possible, it’s best practice for caregivers in a shared custody situation to discuss who will claim the child to avoid problems.
What should a parent do if they find out their child has been claimed wrongfully by another person?
They should inform the IRS immediately. Find more information at irs.gov/identitytheft.
Can I claim the Child Tax Credit (CTC) for my foster child?
Foster parents may claim a foster child if they meet the eligibility rules for the CTC and if the child was officially placed by an authorized agency. Foster parents and other caregivers cannot claim a child if they didn't live with them for six (6) months or more during 2022.
Do I need my foster child’s Social Security number (SSN) to claim the CTC?
Yes, you need the SSN of any child being claimed as a dependent in order to be eligible for the Child Tax Credit.
What should I do if I don’t have my foster child’s Social Security number (SSN)?
Foster parents are not typically given the foster child’s SSN upon placement and should not apply for a SSN with Social Security Administration on their own. Foster parents should work with the foster care provider agency for assistance.
For foster parents of children under the authority of the New York City Administration for Children's Services (ACS), take the following steps to get child’s SSN for tax filing purposes:
Is there a New York State Child Tax Credit?
Yes, the Empire State Child Tax Credit is state tax benefit that helps families afford the everyday expenses of raising a child. The Empire State child credit is generally worth 33% of the federal CTC and Additional CTC (ACTC). However, New York State has decoupled from federal changes made to the Internal Revenue Code. Because of this, eligibility for the state credit is based on your recomputed federal adjusted gross income (FAGI) – a different calculation than used for the federal credit. For more information, visit the NYS Department of Taxation and Finance page.
What is the Federal Child and Dependent Care Credit (CDCC)?
The federal Child and Dependent Care Credit is a tax benefit to help families pay for childcare for children under the age of 13 or the care of adult dependents who were physically or mentally not able to care for themselves. For tax year 2022, filers may be eligible to claim up to $3,000 of the cost of care services for one qualifying person and $6,000 for care services for two or more qualifying persons and be reimbursed for up to 50% of these costs. This is a return to the credit amounts before the U.S. government made temporary changes to the federal credit for tax year 2021 only.
What is the New York State Child and Dependent Care Credit (NYS CDCC)?
Similar to the federal credit (see above), the NYS Child and Dependent Care Credit is a state tax benefit to help families pay for childcare for children under the age of 13 or the care of adult dependents who were physically or mentally not able to care for themselves. New York State has decoupled from federal changes made to the Internal Revenue Code. Because of this, eligibility for the state credit is based on your recomputed federal adjusted gross income (FAGI) – a different calculation than used for the federal credit. For more information, visit NYS Department of Taxation and Finance.
What is the New York City Child Care Tax Credit (NYC CCTC)?
The NYC CCTC is a local tax benefit to help families who earn less than $30,000 pay for childcare for children younger than age 4. For more information, visit NYS Department of Taxation and Finance.
What if I have older children or qualified dependents who are not children?
The federal and New York State Child and Dependent Care Credits include expenses for qualifying children up to the age of 13 and certain dependents other than children.
What are qualified childcare expenses to claim the credits?
Qualified expenses include money paid out of pocket for the care of a qualifying child or children while you work or look for work. This includes the cost of care outside the home, such as at a day care center, or inside your home, such as a babysitter. Review IRS Publication 503 or ask your tax preparer for more information. Child support payments, expenses reimbursed by a state social service agency, and aid subsidies are not qualified expenses.
How do I get these child and dependent care credits?
You must file your federal and New York State tax returns and provide required information for all qualified expenses. Filers must identify all persons or organizations that provide care for a qualifying child or children, including the provider’s name, address, and Taxpayer Identification Number or Social Security number. Filers should use IRS Form W-10 to request this required information.
Do the credit amounts change based on inflation?
The credit amounts for the federal, state, and City child and dependent care credits do not change value with inflation. They are set by statute.
What are Recovery Rebate Credits and Economic Impact Payments (Stimulus Payments)?
During the COVID crisis in 2020 and 2021, the U.S. government issued three rounds of relief payments to eligible individuals and families. If you did not receive the full amount of the three rounds of Economic Impact Payments (commonly known as stimulus payments) that you were entitled to, you can claim the Recovery Rebate to get these funds. Even if you do not owe money, you can still file or amend a tax year 2020 and/or 2021 return to claim this credit.
How many Economic Impact Payments were issued and how much were they?
There were three economic impact payments issued. The amounts varied based on filers' income:
Some people may also have received Plus-up payments after the third economic impact payment.
What are Plus-up Payments?
“Plus-up payments” were additional payments the IRS sent to people who received a third stimulus payment based on a 2019 tax return or information received from SSA, RRB, or VA, but whose 2020 tax return indicated were eligible for more. For example, they were eligible for a higher amount because of a decline in 2020 income compared to 2019 or a new child claimed on a 2020 tax return.
How do I claim Recovery Rebate Credits?
Missing first and second round payments may only be claimed by filing a 2020 tax return. Missing third payments may only be claimed by filing a 2021 tax return. If you earn $72,000 or less, use NYC Free Tax Prep to file for free! Visit nyc.gov/TaxPrep.
How do I file a tax year 2020 or 2021 return?
Some NYC Free Tax Prep sites can help you complete your return for the 2020 or 2021 tax years or correct a return for the 2020 or 2021 tax year. They may also be able to help with additional years. Use our map to find a site. For tax years prior to 2020, please call the site to confirm.
What do you need to claim the Recovery Rebate Credits?
You will need the tax year and amount of the Economic Impact Payments you received.
You should have received or will soon receive IRS letters including the amounts:
If you do not have these letters, you can check the amounts in your IRS Online account, under the related tax year tab. Get more information on how to set up or access your IRS Online Account.
How do I get the Additional New York State Child and Earned Income Tax Payment?
If you were eligible for the New York State Earned Income Tax Credit (EITC) or the Empire State Child Tax Credit in tax year 2021, you may receive the Additional New York State Child and Earned Income Tax Payment in fall 2022.
What other tax credits are available?
For more detailed information based on your specific situation:
This page was updated on 03/2023.