Tax Credit for Children 2024

For the 2023 tax year, the tax credit for Children will be worth up to $2,000 per qualifying child, with $1,700 being potentially refundable through the additional child tax credit.

Tax Credit for Children 2024

At present, the maximum credit stands at $2,000 per qualifying child. However, Congress is currently considering the Tax Relief for American Families and Workers Act of 2024, which proposes minor adjustments:

• Threshold Increases: The income threshold at which the credit starts phasing out would gradually increase for 2023, 2024, and 2025.This means more families might qualify for the full credit amount.
• Refundable Portion: The maximum refundable portion, currently $1,600 per child, would rise to $1,900 in 2024 and $2,000 in 2025. This implies more families could receive money back even if they owe no taxes.

Tax Credit for Children Eligibility in 2024

The Child Tax Credit (CTC) for 2024 (filed in 2025) offers valuable tax relief for qualifying families, but understanding the eligibility criteria is important.

Child:

• Under 18 as of the end of 2024.
• U.S. citizen, U.S. national, or U.S. resident alien with a valid Social Security number (SSN).
• Lived with you for more than half of 2024.
• Consider your dependent for tax purposes (exceptions apply for divorced or separated parents).
• not making up more than 50% of their own funding.

Taxpayer:

• Must have provided more than half of the child’s financial support in 2024.
• not eligible to be listed on another person’s tax return as a dependent.

Income:

• The credit amount starts phasing out for higher incomes. For 2024, the phase-out begins at:
  • Single filers: $200,000 modified adjusted gross income (MAGI).
  • Married filing jointly: $400,000 MAGI.
  • Head of household: $300,000 MAGI.
• Proposed Adjustments: The Tax Relief for American Families and Workers Act of 2024 proposes increasing these income thresholds, meaning more families might qualify for the full credit.

Special Cases:

• Divorced or Separated Parents: The parent who claims the child as a dependent generally qualifies for the CTC.However, special rules apply if the other parent also provides significant financial support.
• Foster Children: You can claim the CTC for foster children placed with you by a court or authorised agency.

How to Claim Tax Credit in 2024?

While the Child Tax Credit was expanded in 2021 to include advance monthly payments, this feature is not available for the 2023 tax year (filed in 2024).

Choose a Filing Method:

• Self-File: Use tax software, online platforms, or paper forms. If your situation is simple and your income is below a certain threshold, free options might be available.
• Tax Professional: Seek assistance from a certified public accountant (CPA), enrolled agent, or other qualified tax professional.

Gather Documents:

• Social Security numbers (SSNs) for yourself and your qualifying children.
• Proof of income (W-2s, 1099s, etc.).
• Proof of dependency for your children (birth certificates, adoption documents, etc.).
• Other relevant tax documents as per your specific situation.

Complete Your Tax Return:

• Use the appropriate tax form based on your filing status (Form 1040, 1040-NR, etc.).
• Follow the instructions for claiming the Child Tax Credit on the specific lines listed for your chosen form.The lines may vary depending on your tax situation.
• Double-check for accuracy before submitting your return.

Submit Your Return:

• File electronically for faster processing if possible.
• Mail paper returns to the designated address.

Factors affecting Tax Credit for Children refund

The Child Tax Credit (CTC) for 2023 (filed in 2024) doesn’t function like a traditional refund where you get back more than you paid in taxes. However, some factors can affect the amount you receive through the credit, which might feel similar to a refund:

Credit Amount and Refundability:

• Base Credit: The maximum credit per qualifying child is $2,000.
• Phase-Out: For higher incomes, the credit amount gradually decreases.
• Refundable Portion: Currently, $1,600 per child is refundable, meaning you receive it even if you owe no taxes. Proposed changes in 2024 and 2025 could increase this amount.

Tax Filing and Withholding:

• Tax Liability: If you owe more taxes than your total credits and deductions, you won’t receive a refund, even if you qualify for the CTC.
• Federal Income Tax Withholding: Higher withholding throughout the year leads to a larger potential refund, including for the CTC.
• Other Tax Credits and Deductions: These can interact with the CTC, impacting your overall tax liability and refund.
• Marital Status and Filing Status: Your filing status (single, married filing jointly, etc.) can affect your eligibility and credit amount.
• Number of Qualifying Children: The more qualifying children you have, the larger the potential credit and refund.