The Child Tax Credit (CTC) continues to be a lifeline for many families, helping to ease the burden of rising costs associated with raising kids. This blog covers what you need to know about it, including how much is child tax credit 2024, who qualifies, and more.
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What is Child Tax Credit?
For 2024, taxpayers eligible for the Child Tax Credit in the United States can receive up to $2,000 per qualifying child if their income meets specific limits. Of this amount, up to $1,600 may be refundable, even if you owe less to zero tax. You can also claim a refundable portion (additional child tax credit) if you have not used up the full credit, worth up to $1,700.
To qualify for the credit, you need to meet several requirements, especially income limits. The credit starts decreasing when you are a:
- single filer with an adjusted gross income (AGI) above $200,000
- married couple filing jointly with an AGI over $400,000
The credit decreases by $50 for every $1,000 above the threshold, so you completely lose eligibility once you earn over $240,000 (for individuals) or $480,000 (for couples).
Debunking the $300 direct deposit child tax credit: On June this year, news has spread that the IRS would resume the $300 direct deposit payments. This is an outdated program part of the American Rescue Plan Act, which ran around the COVID19 pandemic, from July to December 2021. This program no longer exists.
Who Qualifies for Child Tax Credit 2024?
The Child Tax Credit offers significant financial relief if you keep meeting the criteria every year.
- Age. The child must be under 17 years old at the end of the tax year.
- Relationship. The child must be your biological child, stepchild, adopted child, or a descendant of any of these (such as a grandchild). Additionally, they can also be a foster child placed with you by a government agency.
- Dependent Status. The child must be claimed as a dependent on your tax return. This requires meeting certain criteria that confirm they rely on you for financial support.
- Residency. The child must live with you for more than half of the year. There are some exceptions to temporary absences (like illness or education) that may still allow you to meet this requirement.
- Financial Support. You must provide more than half of the child’s total support for the year. This includes expenses such as housing, food, education, and other necessities.
- Citizenship. The child must be a US citizen, US national, or a resident alien. This ensures that the credit is available for dependents who are legally recognized in the US.
- Income. For the tax year 2024, your adjusted gross income (AGI) must be below specific thresholds to qualify for the full credit. The phase-out begins at $200,000 for single filers and $400,000 for married couples filing jointly.
How to Claim the Child Tax Credit
The Child Tax Credit is claimed via filing tax returns, and the process is relatively straightforward. Here’s how:
- Use Form 1040 or 1040-SR, Schedule 8812 and indicate the number of qualifying children.
- Ensure you have the following documents or information:
- Child’s Social Security Number (SSN)
- Income Verification (include W-2s, 1099s, or other relevant documents)
- Filing Status
If you missed advance payments, you could still claim full credit when filing your return. Include all relevant details about qualifying children, and the IRS will determine your eligible amount.
- What to Do If Your Claim Is Denied
If your claim for Child Tax Credit is denied, you will be required to repay any amounts you received in error, along with accrued interest.
Additionally, you may need to submit Form 8862, ‘Information to Claim Certain Credits After Disallowance,’ before being eligible to claim the CTC again.
Should the IRS find that your claim was incorrect, you could face a penalty of up to 20% of the amount claimed for the credit.
Common Claiming Mistakes to Avoid
Many are unaware of the kinds of mistakes that could delay refunds or even get their claims denied. Here are some common errors to watch out for:
- Getting Personal Information Wrong. Before hitting send on your tax return, take a moment to review all your entries. Make sure names, Social Security numbers, income figures, and all the other minutia details are all accurate.
- Claiming Ineligible Dependents. Make sure the kids you are claiming the credits for wholly meet the requirements. This includes age limits and residency rules.
- Filing Status Mistakes. Choose the right filing status for your situation. If you get this wrong, it can mess up how your credit is calculated.
- Reporting Income Incorrectly. If it is over the limit for the Child Tax Credit, your claim might get denied.
- Using the Wrong Forms. Be sure you are using Form 1040 or Form 1040-SR to claim the Child Tax Credit.
General Tips for Claiming
- Stay Organized. Keep all your documents in order. Having a solid record of your income and any supporting paperwork for your dependents will make things a lot smoother.
- File Early. The sooner you file, the better! Getting your return in early can help speed up your refund.
- Check Your Status. After you have submitted your return, you can track its status using the IRS’ ‘Where’s My Refund?’ tool. It’s a great way to catch any potential issues early on.
- Get Professional Help. Tax experts can help make the claiming process easier. They can also help you understand your tax and financial position better.
Visit our relevant article When Are Taxes Due 2025? to learn more about the key deadlines as a filer.
Other Tax Credits for Families
To alleviate child poverty, the government also offers several other tax credits for families, aside from Child Tax Credit:
- Child and Dependent Care Credit
This is designed to assist families with the costs of childcare for children under the age of 13 or care expenses for a spouse or other dependent who is unable to care for themselves. To qualify, the heads of households must have incurred these expenses while they are working or actively looking for work. The credit allows families to claim a percentage of the qualifying care expenses paid, which can significantly reduce their tax liability.
- Earned Income Tax Credit (EITC)
The Earned Income Tax Credit is a beneficial program aimed at low- to moderate-income working individuals and families. It is a refundable credit, meaning that if the credit exceeds the amount of tax owed, the excess will be refunded to the taxpayer who will need to file a federal income tax return for it. The amount of the EITC depends on income, filing status, and the number of dependents. For working families, this credit can provide a substantial financial boost and incentivize employment.
- Adoption Credit and Adoption Assistance Programs
The Adoption Credit offers financial support for families who adopt children, helping to offset the costs associated with adoption. This credit can be claimed for qualifying adoption expenses, such as attorney fees and court costs. In addition, many employers offer adoption assistance programs, providing a tax-free benefit to employees who are adopting. Families may receive financial help from their employers, further easing the financial burden of adoption.
- Education Credits
Education credits, such as the American Opportunity Credit and the Lifetime Learning Credit, can help families cover the costs of higher education. The American Opportunity Credit provides tax benefits for expenses incurred during the first four years of post-secondary education, while the Lifetime Learning Credit can be claimed for qualified tuition and related expenses for students enrolled in eligible educational institutions. These credits can significantly reduce the financial strain of educational expenses, making college more accessible for families.
- Credit for Other Dependents
Families may also qualify for the Credit for Other Dependents, which is applicable for dependents that do not meet the criteria to be classified as a ‘qualifying child’ under the Child Tax Credit. This credit offers up to a certain amount per dependent and can apply to older children, relatives, or other individuals who rely on the taxpayer for support. It serves as an essential option for families supporting members that cannot be claimed under the other tax credits.
FAQs on Child Tax Credit
If you have not received your Child Tax Credit refund within 21 days of filing, it may be due to the longer processing time for the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). If you filed online and selected direct deposit, you can generally expect your refund by mid-February.
If your child turns 17 in 2024, they will no longer qualify for the Child Tax Credit for that tax year. The credit is available only for children under 17 at the end of the year. However, you can still claim the credit if they were under 17 on December 31, 2023.
The CCT is partially refundable. For 2024, you can receive up to $1,600 as a refundable credit if your tax liability is less than the total credit amount. Even if you owe little or no taxes, you can still receive a refund of up to $1,600 based on your qualifying children.
No, there were no advance payments of the Child Tax Credit in 2024. Advance payments were provided in 2021 as part of temporary pandemic relief measures, but for 2024, families will need to claim the credit when filing their tax returns.
Get Professional Tax Advice
Claim your Child Tax Credit accurately this tax season to avoid the IRS denying your refunds or auditing your claims. Tax experts ensure you do not have to go through this hassle. Legend Fusions is here to guide you on your tax and financial affairs, from filing your returns to identifying eligible credits for your family. Talk to our experts today to get personalized advice!
Reviewed by:
Hira Asif
Hira Asif, Client Manager (US) at Legend Fusions, brings over 11 years of tax expertise, including 8 years with Ernst & Young. Her work focuses on tax advisory, compliance, and planning for individuals, partnerships, and private equity funds. With a deep knowledge of federal, state, and local tax regulations, Hira is skilled in identifying tax planning opportunities and reviewing corporate and partnership tax returns to optimize compliance and reduce exposures.