With the tax season in full swing, it is not uncommon for mistakes to occur, especially when claiming credits like the Child Tax Credit. Filing taxes can be a complicated process if you receive multiple sources of income or are a freelancer, but it is additionally complex when you are looking to claim tax rebates.
If you have not filed your taxes correctly, you may be rejected from receiving much-needed rebates and credits even though you are actually entitled to them. It is for this reason that you must take extra care when reporting your income, as it can be the difference between receiving a tax break or not.
Don’t make these mistakes when claiming the Child Tax Credit
The Child Tax Credit is one of the most well-known tax credits. Utilized by millions of families, it is designed specifically for low-income families with minor children. If you qualify for the Child Tax Credit, you may also be able to qualify for its counterpart, the Additional Child Tax Credit. However, many parents still make mistakes when claiming this credit, meaning that they are missing out on their tax obligations being lowered.
Not claiming the tax credit
Despite its popularity, some families are still unaware that they are eligible to claim the credit. For the 2024/2025 fiscal year, the Child Tax Credit is worth $2,000 per qualifying child. Of the $2,000, up to $1,700 is refundable per child. One of the reasons many families do not claim the credit is that they assume the credit is automatically applied. However, this is not the case. You have to apply for the credit separately once you have filed your income tax.
Not checking the qualifying criteria for your child
While some families are not aware at all that they are eligible to receive the tax credit, others do not check the qualifying criteria rigorously enough. This leads to their application being rejected and subsequent disappointment which could have been avoided if you had ensured that you do qualify to receive the credit. Not only must you meet specific income criteria to receive the credit, but your child must also meet specific criteria to be eligible for the credit. If you are unsure, the IRS website outlines exactly what criteria your child must meet for you to receive the credit.
Not meeting the income qualifying criteria
The Child Tax Credit is specifically aimed at low-income families. For this reason, your income must be below a certain limit for you to be eligible to receive the credit. Families will be rejected for applying for the credit if their income exceeds the stipulated income limits. For this tax year, to receive the tax credit, single filers must earn less than $200,000 per annum while couples filing jointly may not earn more than $400,000 if they wish to receive the credit.
Always reach out to a professional if you need assistance
Filing your taxes can be a confusing process, and it can be especially daunting if you have to file additional paperwork for your tax rebates, like what is required for the Child Tax Credit. The IRS provides free resources on its website, as well as free tax advice and services if you are retired, disabled, or meet the income limits stipulated on its website.
In addition to the federal Child Tax Credit, your state may also have a child credit you can claim on top of the federal one. 16 states in the US have their own Child Tax Credit program, assisting millions of families with meeting their tax liabilities with better ease. Always make sure you are aware of your tax rights, as you may be entitled to more rebates than you think.
