What Is The Current Child Tax Credit And What Will Change In 2024? The child tax credit is a federal benefit that helps parents reduce their tax liability and support their children. The credit amount depends on the number of children, their ages, and the income level of the parents. In recent years, the child tax credit has been modified several times to make it more generous and accessible to more families. In 2021, the American Rescue Plan expanded the child tax credit by increasing the credit amount, making it fully refundable, and sending monthly payments to eligible families. However, these changes were temporary and expired at the end of 2021.
In 2024, a new bipartisan bill has been proposed to enhance the child tax credit by providing more generous benefits to parents, especially those with low incomes and multiple children. The bill also aims to lift nearly half a million children out of poverty in the first year. However, the bill does not call for the IRS to distribute monthly checks to those who qualify, unlike the 2021 expansion. The bill still faces uncertainty in Congress, as some lawmakers may oppose it or demand changes to it.
In this article, we will explain what is the current child tax credit 2024 and what will change in 2024. We will also answer some frequently asked questions about the 2024 child tax credit updates and provide some advice on how to claim the credit and maximize your benefits.
Table of Contents
What Is The Current Child Tax Credit And What Will Change In 2024?
What is the current child tax credit and what will change in 2024? The current child tax credit for the 2023 tax year provides a maximum of $2,000 per child under the age of 17. The credit is partially refundable, meaning that you can get up to $1,600 per child as a refund if the credit exceeds your tax liability. The credit also has income limits, which reduce the credit amount by $50 for every $1,000 of income above $400,000 for married couples filing jointly and $200,000 for other filers. Additionally, you must have at least $2,500 of earned income or have at least three qualifying dependents to claim the credit.
What Is The Current Child Tax Credit?
What is the current child tax credit 2024 and what will change in 2024? The proposed bill for 2024 would make the following changes to the child tax credit:
- Increase the refundable amount to $1,800 per child for the 2023 tax year, $1,900 for 2024, and $2,000 for 2025.
- Eliminate the $2,500 earned income requirement and the three-child minimum for the refundable portion of the credit.
- Allow parents of 17-year-olds to claim the credit for them.
- Index the credit amount and the income limits to inflation, so that they do not lose value over time.
- Create a new $500 credit for dependents who are not children, such as elderly parents or disabled relatives.
These changes would primarily benefit lower-income families with multiple children, as they would receive a larger refund and face fewer restrictions to claim the credit. However, the changes would not affect the credit amount for higher-income families, as they would still be subject to the same phase-out rules.
Who Qualifies For The (CTC) Child Tax Credit?
Who can get the Child Tax Credit (CTC)? If you’re an American, you can get the CTC for each qualifying child with a valid Social Security number for working in the U.S. Here’s what the IRS says your dependent must meet:
- Be younger than 17 at the end of the current year.
- Be a son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of these.
- Not provide more than half of their own financial support throughout the year.
- Have lived with you for more than half the year if you’re the one claiming the credit.
- Be claimed as a dependent on their tax return.
- Be a U.S. citizen, U.S. national, or U.S. resident alien
If you meet all the requirements and your yearly income is $200,000 or less, you can receive the full Child Tax Credit for each eligible child. You can verify your eligibility on the IRS website.
Will The Expanded Child Tax Credit Bring Back Monthly Checks?
What Is The Current Child Tax Credit 2024 And What Will Change In 2024? One of the most popular features of the 2021 expansion of the child tax credit was the monthly payments that the IRS sent to eligible families from July to December. These payments were advance payments of half of the estimated credit amount for 2021, based on the information from the previous tax returns or the online portals that the IRS created. The monthly payments helped families with their cash flow and expenses, especially during the pandemic.
However, the proposed bill for 2024 does not include monthly payments as part of the child tax credit. Instead, families would receive the full credit amount when they file their tax returns for 2024, 2025, and 2026. This means that families would have to wait longer to receive their benefits and may face cash flow issues in the meantime.
Some lawmakers and advocates have called for the reinstatement of the monthly payments, arguing that they are more effective and efficient in delivering benefits to families. They also point out that the monthly payments have proven to be popular and successful, as they reached about 90% of eligible families and reduced child poverty by about 25%. However, other lawmakers and critics have raised concerns about the cost, complexity, and accuracy of the monthly payments, as well as the potential for fraud and abuse. They also question the need for monthly payments, as the economy recovers from the pandemic and families have other sources of income and support.
Therefore, the fate of the monthly payments depends on the outcome of the legislative process and the political negotiations that will take place in Congress. It is possible that the monthly payments could be added, modified, or removed from the final bill, depending on the preferences and priorities of the lawmakers.
How To Claim The Child Tax Credit?
To claim the Child Tax Credit, you need to list your children and dependents on Form 1040, also known as the U.S. Individual Income Tax Return. Additionally, you should include Schedule 8812, which covers Credits for Qualifying Children and Other Dependents.
If you’ve filed tax returns for 2019 or 2020, or if you’ve registered to receive a stimulus check from The IRS, You’ll Automatically Receive The Child Tax Credit; There’s No Need For Additional Sign-Ups.
How To Claim The Child Tax Credit And Maximize Your Benefits?
To claim the child tax credit, you need to file a federal income tax return and include the information about your qualifying children and dependents. You also need to have a valid Social Security number for yourself and your children, or an Individual Taxpayer Identification Number (ITIN) if you are not eligible for a Social Security number. You can use the IRS online tools or a tax software to calculate your credit amount and fill out the required forms.
To maximize your benefits from the child tax credit, you should do the following:
- Update your information with the IRS if you have any changes in your income, family size, or address. This will help the IRS determine your eligibility and credit amount accurately and avoid any errors or delays in your payments or refunds.
- Claim the credit for all your qualifying children and dependents, even if they are not your biological or adopted children. You can claim the credit for your stepchildren, foster children, grandchildren, siblings, nieces, nephews, or any other relatives who live with you and depend on you for more than half of the year, as long as they meet the age, residency, and citizenship requirements.
- File your tax return as early as possible, preferably electronically and with direct deposit. This will help you receive your refund faster and avoid any penalties or interest for late filing or payment. You can also use the IRS Free File program or the Volunteer Income Tax Assistance (VITA) program to get free tax preparation and filing assistance if you qualify.
Can I Receive The Benefit If I Haven’t Filed Taxes?
The IRS mentions that filing taxes isn’t mandatory for everyone. Even if you missed the deadline to enroll for monthly Child Tax Credit payments (which was November 15), you can still receive the full credit, which can go up to $3,600 per child. Simply file a tax return next year to claim it.
Can The Child Tax Credit Affect Other Government Benefits?
No, The Child Tax Credit (CTC) won’t impact the amount people receive from other federal benefits like unemployment insurance or Medicaid.
How Will The Child Tax Credit Change In 2024
As for changes in 2024, the House Ways and Means Committee approved the Tax Relief for American Families and Workers Act on January 19, 2024. The proposed bill aims to expand the CTC, currently set at $2,000 per child with a refundable portion of up to $1,600. The modifications involve a per-child basis calculation, multiplying earned income exceeding $2,500 by 15 percent and then by the total number of children.
These changes are anticipated to apply to the tax years 2023-2025, with the maximum refundable credit increasing to $1,800 for 2023, $1,900 for 2024, and $2,000 for 2025. The overall CTC maximum will also be adjusted for inflation in 2024 and 2025.
For the 2023 tax year, filing the federal tax return (Form 1040 or 1040-SR) by April 15, 2024, or by October 2024 with an extension is required. To determine the CTC amount and potential refund, completing Schedule 8812 is necessary.
FAQs: What Is The Current Child Tax Credit And What Will Change In 2024?
Here are some of the frequently asked questions about what is the current child tax credit 2024 and what will change in 2024:
Q: How much is the child tax credit for 2024?
A: The child tax credit for 2024 is $2,000 per child under the age of 18, plus $500 per dependent who is not a child. However, the refundable portion of the credit is $1,900 per child and $500 per dependent, meaning that you can get that amount as a refund if the credit exceeds your tax liability.
Q: Who is eligible for the child tax credit in 2024?
A: You are eligible for the child tax credit in 2024 if you have a qualifying child or dependent who meets the age, residency, and citizenship requirements, and if your income is below the phase-out limits. The phase-out limits are $400,000 for married couples filing jointly and $200,000 for other filers. You do not need to have any earned income or a minimum number of dependents to claim the credit.
Q: Will I get monthly payments for the child tax credit in 2024?
A: No, you will not get monthly payments for the child tax credit in 2024, unless the proposed bill is changed to include them. You will receive the full credit amount when you file your tax return for 2024.
Q: How do I update my information for the child tax credit?
A: You can update your information for the child tax credit by using the IRS online tools, such as the Child Tax Credit Update Portal, the Non-filer Sign-up Tool, or the Online Account. You can also contact the IRS by phone, mail, or in person. You should update your information if you have any changes in your income, family size, or address, or if you want to change your payment preferences.
Q: What if I make a mistake or receive an incorrect payment for the child tax credit?
A: If you make a mistake or receive an incorrect payment for the child tax credit, you should contact the IRS as soon as possible and follow their instructions. You may have to file an amended tax return, repay some or all of the excess payment, or claim an additional credit or refund. You should also keep all your records and documents related to the child tax credit, such as your tax returns, notices, letters, and bank statements.
Conclusion: What Is The Current Child Tax Credit And What Will Change In 2024?
The child tax credit is a valuable benefit that helps parents reduce their tax liability and support their children. The credit has been modified several times in recent years to make it more generous and accessible to more families. In 2024, a new bipartisan bill has been proposed to enhance the child tax credit by providing more generous benefits to parents, especially those with low incomes and multiple children.