6 weeks left 2024 tax season, and the Senate is still considering a tax bill that would send more money this year to low-income families with children. law, American Families and Workers Tax Relief Act of 2024which has already passed the House of Representatives. child tax credit We will increase the maximum amount that can be refunded per child over the next three years.
This story is part of 2024 taxesCNET covers the best tax software, tax tips, and everything else you need to file your return and track your refund.
IRS Commissioner Daniel Werfel said on February 15th. He said his agency is currently monitoring the status of the bill in the Senate and is “ready to move quickly” to expand the child tax credit if it becomes law. In response to Werfel’s comments, the IRS said: February 21st If Congress changes the credit guidelines, adjustments will be made automatically to taxpayers who have already filed, so eligible taxpayers will not need to take any additional action.
The proposed child tax credit increase would work differently than the 2021 changes. Center estimates on budget and policy priorities 16 million children from low-income households will benefit from the new loan increase in the first year. This credit expansion is part of a larger tax bill that expands some business credits. We can help you find out if you qualify for the Child Tax Credit and how much you and your dependent children could receive.
Learn more about when you can receive your Child Tax Credit refund in 2024 and which states implement the Child Tax Credit.
What are the proposed child tax credit enhancements in 2024?
The proposed changes to the $2,000 child tax credit would cover three tax years: 2023, 2024, and 2025. That means you can claim the expanded tax credit this tax season when you file your 2023 tax return.
Child tax credit partially retained Refundable, which means that even if you haven’t paid taxes, you can still get a refund for some of your credits. The new rules increase the maximum refundable amount from $1,600 per child. For tax year 2023, it increases to $1,800. $1,900 for tax year 2024. For tax year 2025, it would be $2,000. Amounts in 2024 and 2025 are adjusted for inflation.
After excluding the refundable amount ($200 for tax year 2023), the remaining $2,000 will be non-refundable. In other words, tax credits can only be used against taxes owed. You cannot receive any additional money after your tax liability reaches zero.
As part of the massive 2021 coronavirus aid package, Congress temporarily expanded the child tax credit. Contributed to pushing child poverty to record lows.
The 2021 Pandemic Child Tax Credit increases the credit amount to up to $3,600 per child under age 6 and $3,000 per child ages 6 to 17. This credit is fully refundable and allows eligible households to receive half of the credit amount in monthly prepayments in 2021 and the other half in 2022 instead of taking a credit after filing their 2022 taxes. become. Congress did not extend any larger credits beyond 2022, and the credits returned to pre-pandemic levels.
How soon can I receive my additional child tax credit amount?
In testimony before the House Ways and Means Committee on February 15, the IRS’s Werfel said his agency is monitoring the child tax credit expansion as it moves through Congress, and that if the bill becomes law, the IRS will move quickly. He said he could take action.
Werfel said that given the agency’s experience sending out three rounds of stimulus checks during the pandemic, the IRS could begin implementing them “as early as six to 12 weeks after passage, depending on the final language of the bill.” He said there is. This year’s tax season ends on April 15th, a little over seven weeks from now.
But Werfel said, “Taxpayers should not wait for this law to file their returns. We will take care of additional refunds for taxpayers who have already filed. Taxpayers should not wait until they file their returns. There is no need to take any additional measures.” Amended tax return.
How much could I receive from the proposed child tax credit expansion?
A new child tax credit plan aims to put more money into the hands of low-income families. “15 million children from low-income families will be better off as a result of this plan.” Sen. Ron Wyden said., a Democrat from Oregon, helped shape the tax deal. “It’s amazing that we have the opportunity to pass pro-family policies that will help so many kids get ahead.”
Critics of the previous child tax credit said it would keep funding from the kids who need it most. Up to 19 million children in the lowest income households receive less than the full credit because their parents earn too little. Urban Research Institute Found (PDF).
The new increased credit will bring the maximum refund per child to $1,800 in the 2023 tax year, $1,900 in the 2024 tax year, and $2,000 in the 2025 tax year, allowing low-income households to claim a larger refund of the credit. become able to. . Under the previous tax cut, the maximum refundable tax credit per child was $1,600.
The new credit rules will provide more funding to households with multiple children by taking into account the number of eligible children when calculating the amount of the credit. said Congressman Jason Smith.a Republican from Missouri, also helped write the bill.
for example, Focus on estimating budget and policy priorities A single parent with two children with an income of $13,000 would double their credit in the first year, earning a benefit of $1,575.
Am I eligible for the new child tax credit?
Eligibility rules for the new credit will be similar to the existing non-pandemic child tax credit.To qualify for this year’s tax break, you and your family must must meet these requirements:
- you have Modified Adjusted Gross Income, or MAGI; Up to $200,000, or up to $400,000 if filing jointly.
- The child applying for the credit was under 17 years of age as of December 31, 2023.
- The child has a valid Social Security number.
- They are your legal children, stepchildren, foster children, siblings, half-brothers, half-sisters, or descendants of any of these categories (grandchildren, nieces, nephews, etc.).
- They contribute only half of their own financial support in the relevant tax year.
- They live with you for more than half the year.
- You are claiming them as dependents on your tax return.
- You are a U.S. citizen or resident alien.
When will I receive the expanded child tax credit?
Under the new proposed rules, you would apply for the credit when you file your tax return, unlike the 2021 credit where you could receive half of it in monthly upfront payments. You will then receive any unpaid child tax credits through your tax refund or, if unpaid, use the credits to offset your tax liability. The IRS said it will make adjustments so those who have already filed do not have to file an amended return.
Will expanding the child tax credit become law?
The House passed the child tax credit bill on January 29, but with six weeks left in tax season, Senate approval is uncertain. Senate Majority Leader Chuck Schumer, a Democrat from New York, said: he said he supports the bill. The White House said President Joe Biden “continues to fight for the full expansion of the child tax credit.”
Learn more about how to track the status of your tax refund and why using ChatGPT to pay your taxes is a bad idea.