President Joe Biden unveiled an economic rescue plan early this month that would give parents payments of up to $300 per child each month to assist them cover the rising expense of childcare. In Biden’s $7.3 trillion budget, the Child Tax Credit increase from 2021 is fully reintroduced.
Is CTC Monthly Payment Returning?
The possibility that American households could once more receive $250 or $300 monthly payments for the Child Tax Credit (CTC) was recently reaffirmed by the Internal Revenue Service (IRS). The purpose of this IRS credit payment is to assist working families, lessen child poverty, and enhance the general well-being of children nationwide. Â
An IRS credit available to parents and guardians for kids under the age of 17 is known as the Child Tax Credit. Since this tax has no income limits, the amount of credit you receive depends only on the number of children in your home and how much you earn.Â
The credit would rise from $2,000 per kid to $3,600 per child under the age of six and $3,000 per child after the age of six under Biden’s proposed budget.
However, the credit could be reduced if your income rises above a particular threshold. The phase-out begins in 2023 at $100,000 for all other individuals and $200,000 for married individuals filing jointly.
What are the Changes that occur in the CTC in 2024?
One of the most effective programs in the country for giving tens of millions of individuals some assistance and space to breathe while raising children is the Child Tax Credit. It has also been demonstrated to be among the most successful strategies for reducing child poverty ever.
Since its implementation in 1997, the credit has helped around 40 million households annually, giving them up to $2,000 per kid. The Child Tax Credit (CTC) saw significant expansions because of the American Rescue Plan.Â
For the initial time, the entire CTC was distributed to all eligible families, meaning that the most financially disadvantaged families did not get the least amount. The CTC was initially offered as monthly payments, typically by direct deposit, on the same day.Â
Child poverty has dropped to a historic low of 5.2%, especially record lows for Black, Hispanic, Asian, and Native American children. This is the first time that the CTC has given greater support to children at the lowest ages, helping over 60 million children.
Who is Eligible for Child Tax credit?Â
You can be qualified for the IRS credit if you live alongside kids or other qualified members. Below is the eligibility of the CTC given.Â
- Candidates Must be under the age of 17 which means no older than sixteen.
- If you have a son, daughter, brother, sister, grandson, sister-in-law, half-brother, half-sister, eligible foster kid, or any combination of these.
- Eligible candidates must not contribute more than half of their total funding.
- They were required to have spent a minimum of six months living with the applicant.
- They are not permitted to file their spouse’s return jointly.
- Candidates Must be a citizen, national, or resident alien of the United States.
- You are not eligible for the entire Child Tax Credit if your yearly income exceeds $200,000 for single people or $400,000 for couples filing jointly.
How to apply for the child tax credit in 2024?
To claim the Child Tax Credit, one must include Schedule 8812, Credits for Eligible Child and Similar Others, with Form 1040, U.S. Individuals Income Tax Return, along with children who qualify as well as other dependents.
The federal tax return (Form 1040 or 1040-SR) for the tax year 2023 must be filed by April 15, 2024, or October 20, 2024, which is the end of the extension. Schedule 8812 must be completed to ascertain the CTC amount and possible reimbursement.
The CTC will be automatically distributed to those who have submitted tax returns for 2023 or who have opted to receive an IRS stimulus check. They don’t have to submit new credit applications.Â
How much do you get from an increased child tax credit?Â
The Tax Relief for US Families and Workers Act of 2024 was passed on January 19, 2024, by the House Ways and Means Committee. The CTC, which is now set at $2,000 per kid with a refundable part of up to $1,600, is intended to be expanded by the bill that was being considered.
 The modifications entail calculating earned income over $2,500 on a per-child ratio by multiplying it by 15% and then by the complete number of kids.Â
The greatest amount of money refundable credit will rise to $1,800 for 2023, $1,900 for 2024, and $2,000 for 2025 as a result of these changes, which are anticipated to take effect for the tax years 2023 through 2025. In 2024 and 2025, the total CTC maximum will likewise be increased for inflation.
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