Managing your family’s finances can be challenging, especially with the various expenses that come with raising children.
The Expanded Child Tax Credit (CTC) is designed to provide significant financial relief to families, helping to ease some of this burden. This enhanced credit aims to reduce child poverty and support families with children by offering substantial financial benefits.
The bipartisan expansion of the Child Tax Credit will benefit millions of families. About 16 million children in low-income families are expected to benefit from this initiative in its first year. Understanding how much you could receive and how to claim it is essential.
This guide offers insights on the 2024 Expanded Child Tax Credit from former IRS agent Michael Sullivan, helping you fully benefit from this financial support.
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What is the Child Tax Credit?
The U.S. government offers a tax benefit called the Child Tax Credit (CTC) to assist families with dependent children. This credit helps reduce the amount of federal income tax that parents or guardians owe, offering financial relief to assist in covering the costs of raising children.
For the 2024 tax year (filed in 2025), the Child Tax Credit is $2,000 per qualifying child, with up to $1,700 of that amount being refundable through the Additional Child Tax Credit.
What is the Expanded Child Tax Credit?
The Child Tax Credit has been expanded for the 2024 tax year, increasing the amount families can receive and broadening eligibility criteria. This expansion aims to provide more substantial support to families, especially those with lower incomes.
How Much Would I Receive from the Expanded Child Tax Credit in 2024?
For the 2024 tax year, the Expanded Child Tax Credit (CTC) provides the following benefits:
- Up to $3,600 per child under the age of 6.
- Up to $3,000 per child aged 6 through 17.
Who Needs to Take Action Now?
If you haven’t filed or registered with the IRS, take action now to start receiving monthly payments from the Expanded Child Tax Credit. The sooner you act, the sooner you’ll receive these payments. Steps to take:
Step 1: Check Eligibility
- Use the Child Tax Credit Eligibility Assistant on IRS.gov to determine if you qualify for the credit. This tool is available in English and Spanish and does not require personal information.
Step 2: Register with the IRS
- If you don’t normally file a tax return, use the Non-filer Sign-up Tool to register. You’ll need to provide bank details and information about your children.
- Alternatively, file a 2019 or 2020 tax return using the Free File system on IRS.gov.
Step 3: Use the Child Tax Credit Update Portal
- After registering or filing, use the Child Tax Credit Update Portal to monitor and manage your payments. The portal allows you to verify eligibility, check payment status, update bank information, and opt out of monthly payments.
Future Updates
- Later this year, you’ll also be able to use the portal to update your mailing address, add or remove children, report changes in marital status, and update income information.
Take these steps to ensure you receive the full advantages of the Expanded Child Tax Credit promptly. If you’re dealing with financial complexities, such as IRS debt, we’re here to support you. Our services include assistance with IRS debt settlement to help simplify your financial situation.
2024 Child Tax Credit Update
The Tax Relief for American Families and Workers Act of 2024, currently stalled in the Senate, proposes significant changes to the Child Tax Credit. If passed, this legislation could extend substantial benefits to lower-income families and those who often miss out on the full benefits of the current tax credit.
Key Provisions of the Proposed Expansion
- Increased Refundable Amounts: The maximum refundable Child Tax Credit amount would increase to $1,900 in 2024 and $2,000 in 2025, up from $1,600 per dependent.
- Inflation Adjustment: The base Child Tax Credit, currently worth $2,000 per qualifying child, would be adjusted for inflation. This could result in an approximate $100 increase per year for 2024 and 2025.
- Eligibility Criteria: Filers must earn at least $2,500 to qualify for the refundable portion of the credit. For tax years 2024 and 2025, filers can use either their current year’s or prior year’s earned income to meet this requirement.
- Consideration of Family Size: Parents and caretakers would be able to factor in the number of children they have when determining the total credit amount they are eligible for.
- Rapid Implementation: If the bill passes in 2024, the IRS aims to implement the changes swiftly, with potential refund adjustments being processed within six weeks of the bill’s passage.
The proposed bill aims to increase support for lower-income families by enhancing benefits and adjusting for inflation. Its future is uncertain, but the potential impact is significant.
Additionally, we provide services like the IRS offer and compromise, guided by a former IRS agent, to help you settle your tax debts for less than what you owe.
Summing Up!
The Expanded Child Tax Credit (CTC) represents a critical financial lifeline for many families, easing the financial burden of raising children, especially for those in low-income brackets. The expansion includes increased credit amounts and monthly advance payments, offering immediate financial relief and addressing child poverty on a large scale, benefiting millions of families nationwide.
However, there are important consequences to be aware of. If you receive an incorrect CTC amount, you must repay it with interest. Additionally, you may need to file Form 8862, “Information To Claim Certain Credits After Disallowance,” before claiming the CTC again. If the IRS determines your claim is erroneous, you could face a penalty of up to 20% of the claimed credit amount.
Make sure to utilize the available tools and resources to claim your credit and maximize your benefits. With the right information, the Expanded Child Tax Credit can significantly enhance your family’s financial stability and well-being. Remember to seek professional help from Michael Sullivan to ensure you are making the most of these benefits.