Child Tax Credit: Are you eligible?

The Child Tax Credit (CTC) is a valuable financial benefit designed to help families with children offset the costs of raising kids. Whether you’re a new parent or have multiple children, understanding the CTC can provide significant savings on your tax bill. This post explains what you need to know about the credit.

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February 11, 2023

What is the Child Tax Credit?

The CTC is a tax benefit that allows eligible families to receive a credit against their federal income tax. This credit helps to reduce the amount of tax owed and can even result in a refund if the credit exceeds the tax liability.

Who Qualifies for the Child Tax Credit?

To qualify for the CTC, the child generally must:

Be under the age of 17
Be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, a grandchild, niece, or nephew)
Provide no more than half of their financial support
Have lived with you for more than half the year
Be properly claimed as a dependent
Not file a joint tax return with their spouse. Exception: They can file a joint return to claim a refund of withheld income tax or estimated taxes paid.
Have been a US citizen, US national, or US resident alien

How much is the CTC?

For 2024, eligible families can claim up to $2,000 per qualifying child. Also, up to $1,700 of this amount may be refundable (the Additional Child Tax Credit). This means if the CTC is higher than your tax, you could receive up to $1,700 as a refund.

CTC Income limits

The CTC begins to phase out and is unavailable at certain income levels. The credit is reduced for single filers with an adjusted gross income (AGI) above $200,000 and married couples filing jointly with an AGI above $400,000. Additionally, single filers and married filing jointly filers with AGI of above $240,000 and $440,000, respectively, cannot claim the credit.

How to Claim the CTC

To claim the CTC, you must file a federal income tax return, even if you do not owe any tax. Use Form 1040 or 1040-SR to report your income and claim the credit.

The Importance of the Child Tax Credit

The CTC is a significant financial benefit for families, providing much-needed support as you raise your children. Above all, the credit can maximize your tax savings. If you have questions or need personalized advice, consider reaching out to a tax professional to ensure you’re getting the full benefit of this valuable credit.

References

Child Tax Credit | Internal Revenue Service. https://www.irs.gov/credits-deductions/individuals/child-tax-credit.