The Child Tax Credit (CTC) has become a vital source of financial support for families across the United States. In 2024, a record amount of payments were made available to qualifying families, making it the largest CTC of the year. Eligible taxpayers with dependents under the age of 17 can claim this non-refundable credit to help relieve financial stress. The 2024 child tax credit is based on income, filing status, the number of children, and whether the IRS considers your dependent a qualifying child.
CTC has been providing relief to up to 40 million families
Up to 40 million families qualifying to receive the CTC tax benefits. Since 2017, the CTC has been providing up to $2,000 a year in benefits for qualifying families under the Tax Cuts and Jobs Act (TCJA). Additionally, families with dependents who are over the age of 17 and full-time students ages 19 through 24 may qualify to receive a nonrefundable credit of up to $500 for each dependent.
For the 2024 year, the refundable CTC amount received by families was $1,700. The credit is subject to specific income rules in addition to the qualifying age of the children. Further, families may qualify for the additional child tax credit which provides a partial tax refund instead of the full amount. CTC are also available to high-income families, but at a reduced rebate amount.
Some families may receive as much as $2,000
The highest CTC a family can receive is $2,000. To qualify for the full amount, your modified adjusted gross income must amount to$400 or less (for married couples filing jointly) or $200 or less (for all other filers). If your income surpasses these limits, $50 is deducted for every $1,000 over the threshold. The additional child tax credit is set at $1,700 however.
As your income approaches $200,000 a year for a head of household, the child tax credit begins to become non-applicable. Similarly, if a household earns a combined income of $400,000 for married couples filing jointly, the credit begins to be phased out. This is because the tax credit is intended to help families who are struggling financially to support their child dependents.
It is important to note that the full $2,000 is not entirely exempt from tax. Even if you do not usually file for income tax, the $2,000 will not be received in full as a tax refund. The maximum refundable amount is $1,700. For the 2023 tax year, only $1,600 was fully refundable. Importantly, if you qualify, you may still not receive the full $1,700 depending on your income. Once your tax bill is reduced to zero, you may receive up to $1,700 not subject to tax.
Families and dependents must meet qualifying criteria to be eligible for the refunds
Children must be under the age of 17 to qualify for the refund. The child must be a biological child of the tax payer, or a step-parent of the child, a sibling of the tax payer, a foster child of the tax payer, or a descendent of the tax payer. The dependents themselves cannot contribute to more than half of financial support each year.
Dependents must live with the tax payer for at least half a year. Dependents cannot file a joint return with their spouse unless they file it to claim a refund of withheld income taxes or estimated taxes paid. Dependents must be citizens of the U.S, U.S. national, or U.S. resident alien during the tax year. The child must be claimed as a dependent on your tax return.
The CTC not only supports immediate family financial needs but also contributes to long-term benefits. Families can use the credit to save for future expenses, such as college tuition or emergency funds, fostering financial stability. This credit may also help reduce child poverty rates.
