If you live in the US and have children in your family, then this news can be very beneficial for you. The US tax agency IRS (Internal Revenue Service) has started giving refunds of up to $2,000 to eligible families under the Child Tax Credit for the year 2024. This refund is being given for every eligible child, which will provide financial relief to the parents.
Now the question arises – what is this child tax credit? Who are eligible for it? How will this money be available? How much amount will be refunded? And what will have to be done to get it? Let us understand the answers to all these questions in easy and detailed manner.
What is Child Tax Credit?
Child Tax Credit (CTC) is a kind of tax exemption or refund that the US government gives to parents so that the cost of raising children can be reduced a little. Every family that has children under the age of 17 gets the benefit in this.
For the tax year 2024, this credit is being given up to $2,000 per child. This means if you have two children and you are eligible for both, then you can avail up to $4,000.
Out of this, an amount of $1,700 is refundable. That is, even if your tax liability is less, you can get this money back directly to your bank account.
Who Are Eligible for This? (Eligibility)
The IRS has set some fixed standards on the basis of which it is decided whether you are eligible for child tax credit or not. It is important to understand these standards.
Child Related Conditions
- Age – The child should be under 17 years of age by December 31, 2024.
- Relationship – The child must be your son, daughter, stepchild, foster child, sibling or their child.
- Residency – The child must have lived with you for at least half of the year.
- Support – The child must not have provided more than 50% of his or her own financial support.
- Citizenship – The child must be a U.S. citizen, U.S. resident or U.S. national and have a valid Social Security number.
Parental Income Limits
- If you are a single filer, your annual income must be less than $200,000.
- If you are a married couple filing taxes together, your combined income must be less than $400,000.
If your income exceeds these limits, the tax credit will be reduced by $50 for every $1,000 of additional income.
How to Claim the Child Tax Credit?
If you want to take advantage of this credit, you will have to fill some important forms in your tax return:
- Form 1040 – This is your main tax return form.
- Schedule 8812 – Child tax credit and additional refundable credit (ACTC) are calculated through this form.
Both these forms have to be filled with correct information and submitted to the IRS on time. If you do e-filing and choose the option of direct deposit, then your refund can be received quickly.
What is Additional Child Tax Credit (ACTC)?
Sometimes it happens that your total tax liability is less than $2,000. In such a situation, the IRS gives you the remaining amount as a refund, which is called Additional Child Tax Credit (ACTC).
- Up to $1,700 per child is refundable for the year 2024.
That is, if for some reason you are unable to claim the full $2,000 credit, you can get at least $1,700 as a refund – whether you have a tax liability or not.
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Important Deadlines
According to IRS rules, the last date for submitting tax returns is usually April 15.
- For the 2024 tax year, returns must be submitted by April 15, 2025.
If you file late, you may face a delay in getting a refund or a penalty.
Changes are Possible in the Future – Rules May Change After 2026
The child tax credit that is currently available is applicable under a law till 2025. After this, if the US Parliament (Congress) does not pass any new law, then this credit will again revert to the old limit – that is, $1,000 per child.
Therefore, families must be aware of this and prepare all the documents and tax forms in time.
Some Key FAQs
1. Will I Get $2,000 for Each Child?
Yes, if you meet all the eligibility criteria and the child is under 17, you can get up to $2,000 per child.
2. Is the Credit Refundable?
Yes, up to $1,700 of this amount can be refunded – even if your tax liability is low.
3. What If My Income Is Above the Limit?
Your credit will gradually decrease – $50 will be reduced for every $1,000 of additional income.
4. Do I Have to Apply Separately?
No, just file your tax return (Form 1040 and Schedule 8812) on time and provide all the correct information, including your Social Security number.
5. When Will I Get My Refund?
If you file your taxes on time and opt for e-filing and direct deposit, your refund can come quickly – usually within a few weeks.
Conclusion: A Source of Relief for Families
The Child Tax Credit is a very helpful scheme of the US government which is extremely beneficial for those parents who feel the financial burden of raising children. This credit not only reduces taxes but also gives a direct cash refund to needy families. It can prove to be very useful, especially for those with limited income.
If you have eligible children and you file taxes in the US, then definitely take advantage of this benefit. Fill out the documents on time and keep checking the IRS website for updates from time to time.
If you haven’t received any information from the IRS yet, create a My IRS account to check if you are eligible for this scheme. A little preparation and information on your part can bring you thousands of dollars in relief.