The Child Tax Credit (CTC) is a critical financial benefit for eligible families with dependent children in the United States. Established in 1997, the CTC aims to ease the financial burden of raising children. Recent changes have increased the benefits under this program, particularly through the American Rescue Plan. Here’s what you need to know about the $1,400/person + $3,600 CTC payment coming for Americans in 2024.
Payment Details
The initial CTC amount was $2,000 per child, with $1,400 being refundable. Significant changes came in 2021 when the American Rescue Plan increased the CTC to $3,600 for children under six and $3,000 for children aged six to seventeen, making the entire credit refundable for that year. While this enhancement was not extended into 2022, new adjustments are anticipated for 2024/25 to account for inflation.
Expected Adjustments
For the fiscal year 2024/25, under the proposed Tax Relief for American Families and Workers Act of 2024, the maximum refundable amount is set to rise gradually, reaching $1,900 in 2024 and $2,000 in 2025. This gradual increase aims to help families keep up with the rising cost of living.
Changes in CTC 2024
In 2021, due to the American Rescue Plan, the CTC increased significantly, providing $3,600 for each dependent under six years old, and making the entire credit refundable. This meant families could receive a refund even if they owed no taxes.
Looking forward to 2024, the CTC is expected to increase slightly to keep up with inflation. The refundable amount is set to increase to $1,900 in 2024 and $2,000 in 2025. These adjustments are designed to ensure that households receive sufficient support to cover their expenses.
Eligibility
The American Rescue Plan provides direct benefits to employed households. Here are the key eligibility criteria:
- Income Limits: Single individuals must earn less than $75,000, joint filers must earn up to $150,000, and heads of household should not earn more than $112,500.
- Children: Families can receive up to $1,400 for each qualifying child.
Expected Benefits
For individuals without children, the income tax credit ranges from $543 to $1,502. For those with children, the CTC offers $2,000 to $3,000 per child over six years old and $3,600 for children under six. The age limit for a qualifying child has been raised to 17 years.
Who is Eligible?
To qualify for the CTC, families must meet the following requirements:
- Each child must have a valid Social Security Number.
- The child must be under 17 years old at the end of the tax year.
- The child must live with the applicant for more than half the year.
- The child must be an American citizen, national, or resident alien.
- The child must not have provided more than half of their own support.
Filing Requirements
Families who missed the signup deadline for monthly payments should file a tax return to claim the full CTC. This ensures that households receive the maximum benefits under the law. The CTC does not affect other federal benefits, meaning families can receive multiple forms of assistance without reductions.
Key Points
The CTC helps families by providing tax refunds, which are essential for covering child-rearing costs, especially as living expenses rise. To claim the CTC, families need to file a federal tax return using Form 1040 and attach Schedule 8812. Those who filed taxes for 2019 or 2020 or received stimulus checks will automatically receive CTC payments without additional signups.
The CTC does not impact other federal benefits such as unemployment insurance or Medicaid, ensuring families can receive various forms of assistance without cuts. Staying informed about CTC rules and eligibility is crucial for maximizing the benefits in the coming years.
FAQs
How much will the CTC be in 2024?
Up to $1,900 per child.
Who qualifies for the $1,400 stimulus check?
Individuals earning under $75,000 and qualifying families.
How do I claim the CTC?
File a tax return using Form 1040 and Schedule 8812.
Does CTC affect other federal benefits?
No, it does not.
What is the age limit for a qualifying child?
Under 17 years old.
