The child tax credit gives families with kids under 17 a $2,000 benefit. In 2024, $1,700 of that money might be given back as a refund.
The child tax credit (CTC) is a government tax break that helps families with kids. It’s been talked about a lot this year because lawmakers wanted to make it bigger, but they couldn’t do it in time for next year’s tax season.
What is the child tax credit?
The child tax credit helps parents with kids under 17 reduce their taxes. You might get some of the credit back as a refund too.
To get help, taxpayers and their kids must meet specific rules about the child’s age and how they’re related to the person claiming them.
Taxpayers need to make sure they earn below a certain amount to qualify for the credit. If you make too much money based on your filing status, you may get less money or not qualify at all.
Child tax credit 2024
In 2024, if you make $400,000 or less (if you’re married) or $200,000 or less (if you’re not married), you can get $2,000 for each child on your taxes filed in 2025.
If you make too much money, the credit gets smaller by $50 for every $1,000 you earn over a certain amount until it goes away completely.
The extra money you can get back, called the additional child tax credit, will now be up to $1,700, instead of $1,600 in 2023.
Requirements: Who qualifies for the child tax credit?
People who pay taxes can get money back by claiming the child tax credit on their yearly tax forms. There are seven things you and your child need to meet in order to qualify: age, relationship, dependent status, where you live, how much money you provide for the child, being a citizen, and how much money you make.
Age: Your child must have been younger than 17 by the end of the year for taxes.
Relationship: The child you are claiming must be related to you in one of these ways: son, daughter, stepchild, foster child, sibling, half sibling, step sibling, or grandchild, niece, or nephew.
Dependent status: You need to claim the child on your taxes. The child can’t file taxes with someone else unless they’re trying to get back money already paid.
Residency: The kid you’re saying you take care of must have been with you for at least half the year (with a few exceptions).
Financial support: You need to have paid for most of the child’s expenses in the past year. If the child paid for most of their own expenses for more than six months, they probably won’t qualify.
Citizenship: According to the IRS, your child must be a “U.S. citizen, U.S. national, or U.S. resident alien,” and must have a valid Social Security number.
Income: Parents or caregivers who claim the credit usually can’t make too much money. If your income is above a certain amount, the credit will be reduced until it goes away completely.
How to claim the child tax credit
People who pay taxes can get money back for their kids in 2024 when they do their taxes in 2025.
If you haven’t filed your taxes for 2023 yet, you can still claim the child tax credit and extra child tax credit by using Form 1040 or 1040-SR. Just make sure to file by October 15, 2024, if you got an extension.
You must also complete Schedule 8812 when you file your 1040 tax form. This schedule shows how much credit you can get for qualifying children and dependents, and how much of a refund you might get back.
Many good tax software programs will help you get the child tax credit by asking you questions and filling out forms for you. If you don’t make much money, you might be able to use free tax software from the IRS.
Additional child tax credit
If you can’t use all of the Child Tax Credit because you don’t owe enough taxes, you might get some money back by applying for the Additional Child Tax Credit. To do this, you need to meet the income and dependent requirements, as well as some extra rules.
You need to have a job that pays at least $2,500 or have three or more people who rely on you.
- Earned income usually comes from working, like having a job or being self-employed. It doesn’t include money from things like investments, retirement funds, government aid, or being out of work.
- You can’t leave out money you earned in another country from your taxes if you fill out Form 2555 or Form 2555-EZ, whether you are single or married.
The IRS calculates your extra child tax credit by multiplying your income over $2,500 by 15%. You can get this amount or the unused portion of the child tax credit, whichever is less. Just remember that the most you can get back is $1,700 per dependent. If you have three or more kids, it can get more complicated. Check Schedule 8812 for more information.
When to expect your child tax credit refund
According to the rules, the IRS can’t give back money for taxes with the extra child credit until around mid-February. If you send your taxes by mail, it might take longer. You can check the IRS website to see where your refund is.
2024 child tax credit news update
A bill called the Tax Relief for American Families and Workers Act of 2024 is stuck in the Senate. This bill was supposed to help lower-income families by changing the Child Tax Credit. If passed on time, it would have made different improvements to the credit.
- Increasing the maximum refund amount to $1,900 in 2024 and $2,000 in 2025, and adjusting the initial credit amount to account for rising prices.
- Letting parents and caretakers consider the number of children they have when figuring out how much credit they can get.
- Allowing people to use the money they made in the current year or the year before to qualify for the Child Tax Credit is important for families with low incomes. Otherwise, they might not be able to qualify if they didn’t make enough money in a year.
Consequences of a child tax credit error
A mistake on your tax form can make your refund or part of your refund for the child tax credit come later. Sometimes, the IRS might not give you the credit at all.
If the IRS denies your CTC claim:
- You need to return any CTC money you received by mistake, along with interest.
- You may have to fill out Form 8862 before you can get the CTC again.
- If the IRS decides that your claim for the credit is wrong, you might have to pay a penalty of up to 20% of the credit amount you claimed.
State child tax credits
Besides the federal child tax credit, some states like California, Colorado, and New York also have their own child tax credits that you can get when you file your state taxes. Check your state’s tax website for more information.
What does the $500 credit for other dependents (ODC) mean?
If your child or a family member you take care of doesn’t meet the requirements for the Child Tax Credit but you can still claim them on your taxes, you might get a $500 credit called the “credit for other dependents.” The IRS has a tool to check if your dependent qualifies.
Child tax credit versus child and dependent care credit
Even though they sound alike, the child tax credit and the child and dependent care credit are different. The child tax credit helps parents save on taxes, while the child and dependent care credit helps working parents or caregivers with expenses like day camp or after-school care. Each credit has its own rules and requirements.