New Child Tax Credit 2024 : Congress is working on a plan to boost financial support for families with lower incomes and kids. Here’s the scoop: The New Child Tax Credit (CTC) could get a nice bump up in the coming years. They’re thinking about raising the maximum amount families can get per child over the next three years as part of the Tax Reduction for American Couples and Employers Act of 2024. This means more money in the pockets of hardworking families to help with the costs of raising kids.
New Child Tax Credit 2024
The Internal Revenue Service (IRS) Commissioner Danny Werfel announced on Capitol Hill that the IRS is ready to move quickly on a nonpartisan tax bill that would restore some corporate tax benefits and temporarily increase the child tax credit. This initiative aims to provide relief to individuals and businesses, ensuring a more user-friendly and responsive tax system.
Capitol Hill, IRS Commissioner Danny Werfel shared that the IRS is prepared to swiftly advance a bipartisan tax bill. This bill aims to reinstate certain corporate tax benefits and temporarily boost the child tax credit. Notably, the child tax credit will be fully refundable, allowing individuals to receive a refund even if they owe no taxes.
The maximum refundable amount will increase progressively: $1,800 for 2023, $1,900 for 2024, and $2,000 for 2025, with inflation adjustments in place for 2024 and 2025.It’s important to note that the tax credit can only offset taxes owed; if your tax liability reaches zero, you won’t receive additional funds. Therefore, any remaining amount after the $200 refundable portion for the 2023 tax year will not be refundable.
Who is eligible for the New CTC 2024?
To qualify for this sweet tax break, your situation should match up with these conditions, similar to the non-pandemic kid tax credit:
- Income Limits: If your modified adjusted gross income (MAGI) is $200,000 or less (or $400,000 if you’re married and filing jointly), you’re in the clear.
- Age Requirement: As of December 31, 2023, your child must be under 17 years old.
- Social Security Number: Make sure your child’s Social Security number is up to date.
- Relationship Status: Your child can be your own, adopted, stepchild, or even a relative like a grandchild, niece, or nephew.
- Financial Support: Your child shouldn’t have provided more than half of their own financial support during the tax year.
- Residency: Your child should have spent over six months of the year living with you.
- Earned Income Threshold: To qualify for the refundable variant of the child tax credit, you need to have earned at least $2,500. For 2024 and 2025, you can use either your income from the previous year or the current year to meet this requirement.
- Citizenship Status: You must be either an immigrant or a U.S. citizen.
When will you expect to receive the New Child Tax Credit?
Great news for tax payers ! During Werfel’s testimony before the U.S. House Committee on Ways and Means, lawmakers were eager to ensure that if the new law passes, it’s going to make a real difference for taxpayers this filing season.
The commissioner assured lawmakers that the IRS is closely following the progress of the legislation.
But here’s the kicker: You don’t need to wait for the law to officially kick in before filing your taxes. Depending on how the final bill is worded, we might be able to start rolling out changes as soon as six to twelve weeks after it becomes law.
And here’s the best part: If you’ve already filed your taxes and are owed additional refunds because of the new law, don’t worry! We’ll take care of everything for you. You won’t need to lift a finger.
If the bill gets the green light, the refundable part of the child tax credit could gradually increase from $1,800 to $1,900 to $2,000 for each tax year between 2023 and 2025.
What is the main purpose of the New Child Tax Credit 2024?
In 2024, Democrats and the House GOP majority, though divided, are teaming up to boost the tax credit. When the Senate meets at the month’s end, passing this law should be top priority.
Let’s talk numbers :Child poverty was at 13.7% in 2018. When the child credit kicked in fully in 2021, it dropped to 5.2%. But in 2022, it shot back up to 12.4% after the credit expansion ended.
But here’s the bright spot : The House bill targets its benefits to help low-income households the most. It’s estimated to lift at least half a million kids out of poverty!
A new child tax credit idea could be a game-changer for 16 million of the 19 million children who currently get only a fraction of the full credit due to their families’ low incomes, according to estimates from the CBPP.