The Child Tax Credit is another example of tax relief that, more or less is a credit in your income tax for qualified children and can, in some years, result in a federal tax refund. On the other hand, it sometimes was inconsistent from year to year. We outline the maximum amount of this credit for the 2024 tax year, requirements to qualify, and other federal tax credits that the IRS is offering to help middle- and low-income families, which we will discuss in the article below.
What is the Child Tax Credit?
The Child Tax Credit is an advanceable tax credit. So this advanceable credit doesn’t cause liability but works dollar-for-dollar to reduce the amount of a qualifying family’s federal income tax owed down to zero. Since it’s non-refundable, meaning that it cannot create a refund, it works dollar-for-dollar and its amount decreases what you’ve owed in tax dollars.
This credit ordinarily applies for kids under 17 years, though the IRS enacted specific standards the person must meet to qualify. For example, these requirements consist of income thresholds. If one’s total income exceeds a stipulated amount then one qualifies to some percentage for a credit towards such qualifying children.
Bonus Children Tax Credit
The Supplemental Children Tax Credit is the creditable amount that can be utilized for qualification purposes since the assessment of tax against the individual is less than the amount of the Children Tax Credit. This also has eligibility criteria, similar to the children’s part, which includes dependent status and level of income.
A **Refundable Tax Credit** is the ability to bring the tax bill down to zero and eligible taxpayers are allowed to receive a refund on the federal tax return. For example, if your tax bill is $2500 and you receive a refundable credit of $3000, the IRS will pay you a refund of $500. If it’s a non-refundable credit, it will reduce your tax bill to zero, but there will be no refund.
How much is the child tax credit in 2024?
Let’s speak about how much the amount of child tax credit is. You can claim $2,000 for any qualifying children you have, of which $1,600 is actually refundable. The amount whether you can take all depends on Modified Adjusted Gross Income as well as on your filing status.
The limits are:
$400,000 if you are married and file jointly.
$200,000-if you are single, head of household, or married and filing separately.
If you have earned more than that, the credit amount will decline by $50 for every $1,000 in income earned.
Child Tax Credit Eligibility
According to the IRS, the following can be eligible to claim the credit:
1. Age and dependent status: Your child for whom you are claiming tax credit must be under age 17. Further, the child cannot have filed a joint tax return except as an estimated tax repayment or in case of an income tax deductions.
2. Qualifying child relationship and support: The child should be your son, daughter, stepchild, brother, sister, grandson, granddaughter, nephew, niece, or a child you have adopted. He should live with you for more than half the tax year and not provide all his own financial support.
3. Citizenship status: the child must possess a valid social security number by the time you file for the child, he or she has to be employable, and therefore, becomes a U.S. citizen or a U.S. national.
What is different with the child tax credit 2024 as compared to the 2023 child tax credit?
If you had a dependent last year, you might care about what happened to the tax benefit. Bottom line: Nothing changed this year (2024) and last year (2023). The income limits and amounts of the tax credit are the same for both years.
The child tax credit was raised during the pandemic, to $3,000-3,600 per child under the American Rescue Plan of 2021, and that enhanced amount has now lapsed.
Child Tax Credit vs Child and Dependent Care Credit
It almost sounds the same as the child tax credit, but the child and dependent care credit is actually a different credit altogether. It is for working parents and caregivers whose children are less than 13 years old and whom they pay for.
The refund amount is as high as $3,000 to $6,000*, depending on your filing status and income.
3 Easy Steps to Become Eligible for the Child Tax Credit in 2024
1. Report children and dependents on your Form 1040**: You will report information about your children and other dependents on Form 1040.
2 Complete Schedule 8812 The IRS worksheet helps you to do the arithmetic in the correct way for the computation of the child tax credit.
3. Contest a denial Call the IRS if your claim of credit has been turned down. The IRS is allowed to allow you.
Frequently Asked Questions :-
Q.Can two parents claim the credit for the same child?
A.- No, only one child can be claimed on one tax return.
Q. What should I do if my Child Tax Credit claim is denied?
A.If your claim is denied, the IRS will usually send a letter explaining why. You can follow up with the IRS to resolve any issues. You may need to submit additional forms, like Schedule 8862, to correct the claim.
Q. Is there a state-level Child Tax Credit?
A.Some states offer their own Child Tax Credits, and they can differ from the federal credit. Check with your state’s tax authority for more information.