How Much Is The Child Tax Credit in 2024?
Tax laws and income tax credits are always changing, and it is hard to keep up with everything. One of the recent changes is the amount of the Child Tax Credit. Here is what you need to know to claim on your taxes.
What Is The Federal Child Tax Credit?
When the TCJA passed in 2017 the law combined the previously separate standard deduction and personal exemptions into one larger standard deduction. But that meant you didn't receive any additional exemptions for dependents.
The law did retain the child tax credit, however. The recently passed American Rescue Plan increased and expanded eligibility for the credit. It should be noted that the Federal Child Tax Credit is separate from the Child and Dependent Care Credit, which is only available for taxpayers with child care expenses.
How Much Is The Federal Child Tax Credit for 2024?
The maximum credit per child is unchanged for 2024 and is $2,000 per child. If the dependent is over 17 the maximum credit is $500 per child.
Eligibility Requirements
The Child Tax Credit requires the taxpayer to have an eligible dependent. A qualifying dependent is one:
Be under age 17 at the end of the year
Be your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these (for example, a grandchild, niece or nephew)
Provide no more than half of their own financial support during the year
Have lived with you for more than half the year
Be properly claimed as your dependent on your tax return
Not file a joint return with their spouse for the tax year or file it only to claim a tax refund of withheld income tax or estimated tax paid
Have been a U.S. citizen, U.S. national or U.S. resident alien
Are There Income Limits To Qualify For The CTC?
Yes, there are income limits to qualify for the Child Tax Credit. Generally, the credit is available to those with adjusted gross incomes of up to $200,000 if filing as single or head of household and up to $400,000 if married filing jointly. Taxpayers with income above these thresholds are subject to phase out of 5% of the amount the income exceeds the threshold.
Who Can Claim the CTC in 2024?
Any taxpayer with a qualifying dependent is eligible for the credit in 2024.
What is the Filing Status Requirement to Qualify for the CTC?
The Child Tax Credit is available for taxpayers who file single, head of household, or married jointly. With the exception of filing solely to claim a refund, taxpayers whose filing status is married filing separate are not eligible for the credit.
Do Married Couples Need To File Jointly To Claim The CTC?
Yes. Unless you are filing married filing separately solely to obtain a refund of withholding or estimates paid, married couple must file married jointly to obtain the credit.
How Many Dependent Children Are Required To Receive The Maximum CTC Amount?
Although there are limits on the credit based upon income, there is no maximum number of eligible dependents that can be claimed for the Child Tax Credit. This is different than other credits like the Child and Dependent Care Credit.
Does Adopting A Child Allow For Additional Tax Benefits or Credits?
Legally adopted children can be considered dependents for Federal tax filing purposes. They must meet the additional qualifications to eligible to claim the Child Tax Credit. Qualified adoption expenses are also eligible to claim the adoption tax credit for those costs.
Maximum Credit Amounts
Because the CTC is a refundable credit, it is not limited by your tax liability. Any excess credit is refunded to you as if it was a payment you made to the IRS. There is no limit on the number of eligible dependents, so the maximum credit amount is $2,000 per eligible dependent.
How Much Is The Maximum Credit Per Child In 2024?
For dependents under 17 at the end of the tax year, the maximum amount is $2,000. For those over 17, the maximum credit amount is $500. This amount is unchanged from 2023.
Can A Single Parent Receive a Higher Credit Than A Married Couple With Multiple Dependents?
Single parents filing as Head of Household have higher standard deduction amounts than one half of the married filing jointly deduction. This means that a single parent will generally have a lower tax liability than if they filed married jointly.
Because your tax liability would be lower, your refund from the Child Tax Credit would be higher.
Refundable Credits and Monthly Payments
There are two provisions of the law that make the Child Tax Credit particularly enticing for taxpayers.
Are Any Portions Of The CTC Refundable In 2024?
Yes, the full amount of the Child Tax Credit are refundable in 2024. Remember, the credit is limited by income, so you may not receive the full credit if your total income is higher than $200k for individuals or $400k for married filing jointly.
Advance Payments
When the Child Tax Credit was introduced during the pandemic (tax year 2021), taxpayers were able to receive monthly advanced payments of the credit. This provision no longer exists, and you will only receive the credit when you file your Federal tax return.
Conclusion
Navigating the tax code to lower your taxes and maximize your refund is challenging. You need a guide. Core has the tax professionals to assist in your journey. Reach out to us today to see how we can help you.
