The Child Tax Credit (CTC) has long provided essential support to American families, offering a significant tax benefit for those raising children. As 2024 nears its end, knowing how the program works and what families can expect moving forward is crucial. Here’s a breakdown of the remaining payments, eligibility, and any important changes that may impact your 2024 tax filing.
Child Tax Credit
The Child Tax Credit allows families to receive up to $2,000 per child under the age of 17 when filing their tax returns. While this program was temporarily expanded in 2021 to offer larger payouts—up to $3,600 for children under 6 and $3,000 for children between 6 and 17—the 2024 version has reverted to pre-expansion amounts. This means that the maximum credit families can now claim is back to $2,000 per child.
What Can Families Expect
Unlike 2021, there will be no more advance payments throughout the year. Families must now claim the full Child Tax Credit when they file their 2024 tax returns in early 2025. If your income is eligible, you’ll receive the credit as a tax deduction or as part of your tax refund.
Details to Remember:
- The maximum credit is $2,000 per child, but the exact amount depends on your household income.
- Full credit eligibility is available for families with incomes under $200,000 (or $400,000 for married couples filing jointly).
- Once income exceeds these thresholds, the credit begins to phase out.
- Up to $1,400 of the credit is refundable, meaning that even if your tax liability is low, you may still get part of the credit back through the Additional Child Tax Credit (ACTC).
Non-Refundable Portions
Not all families will receive the full $2,000 per child. Families with low tax liabilities may only receive the refundable portion—up to $1,400—while those with higher tax liabilities may use more of the non-refundable portion to offset what they owe. If your total taxes owed are less than the credit, you’ll receive only the refundable portion as a refund.
State Programs
Several states have introduced their own versions of child tax credits to complement the federal CTC. For example:
- New York and California offer additional tax credits ranging from $250 to $1,000 per child.
These state-level credits can be claimed when you file your state tax return. The amounts and eligibility requirements differ by state, so it’s advisable to check with your local tax authority for more details.
CTC Rules
In 2021, families received monthly advance payments under the expanded CTC rules, helping them manage expenses throughout the year. However, with the return to the lump-sum model for 2024, families need to adjust their financial planning. Rather than monthly installments, the entire credit will be applied when you file your tax return in 2025.
If you were accustomed to those monthly payments, now’s the time to review your tax situation to avoid surprises during tax season. You may want to consult a tax professional to know how this change could impact your refund or tax liability.
Tax Benefits
In addition to the Child Tax Credit, families can also benefit from other tax credits:
- The Earned Income Tax Credit (EITC) can significantly reduce the taxes owed by low to moderate-income working families.
- The Child and Dependent Care Credit can help offset expenses related to childcare, such as daycare costs.
These credits can be claimed alongside the Child Tax Credit, potentially providing more financial relief for families. As with the CTC, eligibility for these additional credits depends on your income and family size.
Staying Informed
Tax laws change frequently, and there could be further adjustments to the Child Tax Credit in the coming years, especially with ongoing political and budget discussions. Staying informed about potential changes—both at the federal and state levels—can help you maximize the benefits available to your family.
By knowing the rules and planning ahead, families can better navigate the changes in tax credits and avoid any financial shortfalls come tax season.
FAQs
How much is the Child Tax Credit for 2024?
The maximum is $2,000 per child under 17.
Will there be advance payments for the Child Tax Credit in 2024?
No, all payments will be made as part of your tax refund in 2025.
Is the Child Tax Credit refundable?
Up to $1,400 per child is refundable, depending on your tax liability.
How does income affect my Child Tax Credit?
The credit begins to phase out for families earning more than $200,000 (or $400,000 for joint filers).
Can I claim state-level child tax credits?
Some states, like New York and California, offer additional credits, which can be claimed on state tax returns.
