Child tax credit 2024: eligibility requirements, repayment amount and more

VaselineAugust 21, 2024

0 7 minutes read

Child tax credit 2024: eligibility requirements, repayment amount and more

The Federal Child Tax Credit (CTC) allows eligible parents and caregivers to reduce their tax liability and could result in a tax refund. However, not everyone can apply for the loan, and loan amounts may differ for those who can.

The 2024 child tax credit is based on income, filing status, number of children, and whether the IRS considers your dependent an eligible child.

Here’s what else you need to know about the child tax credit, including how much (if anything) you can expect next year and the child tax credit challenges facing Congress.

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Child tax credit overview

What is child tax credit?

Child Tax Credit is an essential tax break that supports as many as possible 40 million US families each year to raise their children. The CTC currently provides up to $2,000 per child under the age of 17 under the Tax Cuts and Jobs Act of 2017 (TCJA).

If the CTC exceeds the taxes owed, families can receive up to $1,700 per child in reimbursement for the 2024 tax year.
Credit for other dependents: Other dependents, including those of any age, including 18 or older, and full-time students between the ages of 19 and 24 may be eligible to receive a nonrefundable credit of up to $500 each.

There are also phase-out thresholds for higher-income taxpayers. For example, the child tax credit is starting to be phased out for a head of household earning $200,000 a year and $400,000 for married couples filing jointly.

Note: It’s important to know that the child tax credit is different from the child and dependent care credit. The federal child and dependent care expense credit can be helpful if you’ve paid someone to care for your child or other eligible dependents so that you (and your spouse if you file jointly) you can work or look for work. Federal income tax can be reduced by claiming the Child and Dependent Care Expense Credit on your tax return. For more information, see the Kiplinger report Summer camp is tax deductible?

The data shows that the child tax credit has helped reduce child poverty. However, unless Congress acts, the federal child tax credit would return to $1,000 per eligible child in 2026. And the age limit for eligible children would be lowered to 16. These changes would be due to the scheduled expiration of certain provisions in the TCJA. (More on that below.)

Amount of tax credit for children 2024

How much will your child tax credit be for 2024?

The CTC for fiscal year 2024 is worth up to $2,000 per eligible child under 17.

However, the credit is not complete refundable tax credit. Therefore, you cannot get the full $2,000 back as a tax refund, even if you have a $0 tax liability and qualify for the full amount of the credit.

But there is good news. This tax relief has a refundable part (additional child tax credit) – more on this below. Better yet, due to inflation adjustments, the repayable amount is higher for 2024 than it was a year ago.

For 2024, (the returns you will usually pay at the start of 2025) the refundable part of the child tax credit is $1,700.
For the previous fiscal year 2023, only $1,600 was refunded.

Note: Remember, if you’re eligible, you can get a refund of less than $1,700. This figure is the maximum amount of the refundable portion. How much you qualify for tax credits depends on your annual income.

If you want to find out how much child tax credit you currently qualify for, you can calculate it using the IRS’ online Interactive Tax Assistant tool.

Additional credit for children

What is the additional child tax credit?

The Child Tax Credit can reduce your tax liability by $2,000 per qualifying child. However, this tax credit is not refundable. This means that if you owe less than $2,000 in taxes, you will not receive the unused portion of the credit as a refund.

However, the Additional Child Tax Credit (ACTC) allows you to receive up to a maximum of $1,700 per child as a refund for tax year 2024. You can receive the maximum amount of ACTC after your tax bill is reduced to zero.

CTC requirements

Who qualifies for the child tax credit?

Not everyone will qualify for the child tax credit, and your income isn’t the only determining factor. The IRS also has seven guidelines you and your eligible child must meet to be eligible for the child tax credit.

The following must apply for your household to qualify:

Age: The child must be under 17 at the end of the year.
Relationship: The child must be your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, stepbrother, stepsister, or a descendant of one of them (for example, a grandchild).
Financial support: Children cannot provide more than half of their financial support during the year.
residence: Children claimed under the CTC must live with you for more than half the year.
Dependent status: The child must be claimed as a dependent on your tax return.
File status: Dependents cannot file a joint return with their spouse unless they are filing to claim a refund of income taxes withheld or estimated taxes paid.
Citizenship: The child must have been a U.S. citizen, U.S. citizen, or U.S. resident alien during the tax year.

CTC income limits

What are the income limits for Child Tax Credit 2024?

As mentioned, the amount of Child Tax Credit you can expect to be refunded will depend on you modified adjusted gross income (MAGIES). Once your income reaches a certain limit, the loan amount will decrease or eliminate completely.

The credit amount will be reduced by $50 for every $1,000 over your income limit. For example, your child tax credit will begin to phase out once your MAGI exceeds:

$200,000 for a single filer, qualifying head of household or widower.
$400,000 for married filers filing jointly.
$200,000 for married filing separately.

What about households that don’t normally file tax returns?

Your family may be eligible for Child Tax Credit even if you don’t earn enough to need to file a tax return, but how much you get will depend on your annual earnings. Just as the CTC has a phase-out threshold, it also has a phase-in amount.

To qualify for the credit, families must earn at least $2,500 a year, and the CTC will then kick in a 15 percent rate on every dollar above that amount. In addition, if you have three or more qualifying children, you may be eligible for other tax breaks, such as The Earned Income Tax Credit (EITC).

How to claim CTC

How to claim the child tax credit

You can claim the child tax credit by entering your children or dependents on your federal income tax return (Form 1040). You will attach a completed Program 8812 (Loans for qualified children and other dependents).

That IRS form will also help you determine how much of the CTC you’re eligible for and whether you’ll get additional tax credits. (Note: If you use tax software, the system will guide you through this with prompts. If you use a tax preparer, they will take care of this for you.)

If you don’t normally file a tax return, you can enter your household information online using Enrollment tool for IRS non-fillers. The tool is free and asks for information like your name, address and Social Security number to determine what tax credits you’re eligible for and how to issue your payments.

Also, people who do not have eligible deposits can get CTC refund through Get CTC online tool.

The new update to the child tax credit

What’s next for child tax credit?

The future of the child tax credit is being debated in Congress.

Years ago, the TCJA doubled the child tax credit to $2,000 per child, with a refundable portion of $1,700 in 2024 that phased in starting at $2,500 in earned income. It also temporarily raised the qualifying age for children or dependents to 17.

However, without action from Congress, the child tax credit will return to $1,000 per child up to age 16 once the TCJA tax credits expire. The credit will also be repayable gradually, starting at $3,000 of annual earned income.

The failure to reach an agreement to expand the CTC has long dogged Congress.

Congress has yet to negotiate a successful bipartisan deal to expand the child tax credit. The bipartisan tax package recently failed on a procedural vote and remains deadlocked in the US Senate. If passed, the bill would benefit up to 16 million children who don’t qualify for the full credit because of their parents’ income, according to estimates from the Center on Budget and Policy Priorities (CBPP).

In its first year, the legislation was projected to lift up to 400,000 children out of poverty, and half a million or more would have been lifted out of poverty when it was fully in effect.

Child Tax Credit: What you can do

image of painted handprints

(Image credit: Getty Images)

The child tax credit could be a key fiscal policy issue in the 2024 presidential election. For example, Vice President and Democratic presidential candidate Kamala Harris has called for an expanded CTC. On the Republican ticket, JD Vance also offered an increased child tax credit.

So, as the election cycle moves forward, stay tuned for what the candidates have to say on the issue and any changes coming through Congress.

Otherwise, make sure you claim all the tax credits and deductions you’re entitled to. Consider the Child and Dependent Care Credit and other family tax credits that can help reduce your tax liability.

Also see what state child tax credits and deductions are available to help you and your family save money.

VaselineAugust 21, 2024

0 7 minutes read

Vaseline

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