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The child tax credit offers up to $2,000 per child under 17, with some of it refundable; staying updated on eligibility and changes is important.
Child Tax Credit Overview
The child tax credit (CTC) helps families with children under 17 by offering up to $2,000 per child, with $1,600 of that possibly refundable. Despite attempts to increase this credit, it stayed the same for 2024, according to the report of Nerd Wallet.
- To qualify for the Child Tax Credit (CTC), you and your child must meet certain criteria, including age, relationship, and residency. Your income affects eligibility, with the full credit available for incomes up to $400,000 (married filing jointly) or $200,000 (others). If you can’t use the full CTC due to low tax bills, you might get a partial refund through the Additional Child Tax Credit (ACTC), which could be up to $1,600 per child in 2023. You need at least $2,500 in earned income or three qualifying dependents to qualify for the ACTC.
(photo: NRCL)
Claiming the Credit
Use Form 1040 or 1040-SR and attach Schedule 8812 to claim the CTC and ACTC. Tax software and IRS Free File can assist.
Potential Legislative Changes
A proposed bill could increase the refundable amount to $1,900 in 2024 and $2,000 in 2025, adjusted for inflation.
IRS Implementation and Refund Delays
If the bill passes, the IRS may adjust refunds within six weeks. Errors on your tax form can delay refunds and may result in repayment with interest and penalties.
State-Level and Additional Dependent Credits
Some states, like California, Colorado, and New York, offer their own Child Tax Credits (CTCs). There’s also a $500 credit for other dependents who don’t qualify for the main CTC.
Child Tax Credit vs. Child and Dependent Care Credit
The CTC is different from the Child and Dependent Care Credit, which helps cover childcare costs. Each has its own rules and requirements.
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The child tax credit is a vital support for families with children. Staying updated on eligibility and legislative changes can help you get the most benefit.
