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Child Tax Credit 2024: Should You Wait to File Your Tax Return?

It’s tax season and many people are preparing to file their tax returns as soon as possible to get their refund money back. If you have children and hope to claim the child tax credit this year, it may be beneficial to wait to apply. That’s because the Senate is now working on an expansion of the child tax credit. We will explain what is happening below.

This story is part of Taxes 2024CNET’s coverage of the best tax software, tax tips, and everything you need to file your return and track your refund.

The child tax credit, both the current credit and the one pending in Congress, is partially refundable, meaning that for part of the credit you can get a refund even if you don’t owe any tax. The rest is nonrefundable, so you can use that portion of the tax credit only for the taxes you owe. We will explain the requirements that must be met to be eligible for the child tax credit in 2024.

Find out below if you’re eligible for the child tax credit in 2024 and how much money you could get. For more tax tips, here are this year’s filing deadlines and our picks for the best tax software. Here’s when you can expect to receive your child tax credit this year.

Read more: File early and get up to 20% off your 2023 taxes with TurboTax

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How much is the 2024 child tax credit?

The maximum tax credit available per child is $2,000 for each child under age 17 on December 31, 2023. Only a portion is refundable this year, up to $1,600 per child.

For the 2021 tax year, the expanded child tax credit was $3,600 for children ages five and under, and $3,000 for children ages six to 17. That is no longer the case. The age requirement was also temporarily expanded to those under 18 on December 31, but that too disappeared.

Who is eligible for the child tax credit?

To be eligible for the tax exemption this year, you and your family must meet these requirements:

  • You have a modified adjusted gross income, or MAGI, of $200,000 or less, or $400,000 or less if you file a joint return.
  • The child for whom the credit is claimed was under 17 years of ageon December 31, 2023.
  • They have a valid Social Security number.
  • They are your legally recognized child, stepchild, adopted child, brother, half-brother, or half-sister, or a descendant of one of these categories (such as a grandchild, niece, or nephew).
  • They have not provided more than half of their own financial support in the corresponding fiscal year.
  • They have lived with you for more than half a year.
  • You are claiming them as dependents on your tax return.
  • You are a US citizen or resident alien.

Go to the IRS website for more information.

If your MAGI is above the income limits, the amount of child tax credit you receive will decrease by $50 for every $1,000 above the limit. For example, a MAGI of $210,000 as an individual would allow you to claim $1,500 for each eligible child.

The child tax credit is eliminated entirely at $240,000 for individuals and $480,000 for married couples filing jointly.

Note: If you search online for information about the child tax credit, you can find details about the expanded 2021 tax breaks, so check that you are seeing the most recent information.

Mark Steber, director of tax information for Jackson-Hewitt, says many government sites keep historical information active “so people can catch up on their taxes.”

Will Congress expand the child tax credit in 2024?

As part of a massive COVID-19 relief package, Congress temporarily expanded the child tax credit in 2021, helping push child poverty to a record low. Congress did not extend the expanded credit in 2022 and the credit returned to its pre-pandemic rate.

If approved, the new rules around the $2,000 child tax credit would be more modest and cover three tax years: 2023, 2024 and 2025. That means, if approved, you could claim the expanded credit this tax season when you file. your 2023 tax returns.

As proposed now, the new child tax credit would continue to be partially refundable (so for part of the credit, you could get a refund even if you don’t owe any tax) and the new rules would increase the maximum refundable amount. per child from $1,600 per child to $1,800 in fiscal year 2023, to $1,900 in fiscal year 2024, and to $2,000 in fiscal year 2025, with the 2024 and 2025 amounts adjusted for inflation.

The remainder of the $2,000 after the refundable amount ($200 for tax year 2023) would be non-refundable, so you could use the tax credit only against the taxes you owe; After your tax bill reaches $0, you won’t receive any additional money.

Should I wait to file my taxes?

Although the proposed changes have been approved by the House, it is up in the air whether the Senate will approve the bill. Until the legislation becomes law, you may be wondering if you should postpone filing your tax return. “Unless you’re really hurting for money, I would wait and see what happens,” Duke Alexander Moore, founder of tax service Duke Tax, told CNET.

Those who receive the child tax credit generally do not receive their tax refunds as soon as those who do not claim the credit, but rather receive them in mid-February or later. If you decide to file early and the new child tax credit rules are approved, the IRS can send you the difference this year or you could claim it next year when you file, Moore said.

On the other hand, the IRS told CNET that it recommends filing as soon as you’re ready, whether you’re considering pending legislation or not. Lisa Greene-Lewis, a certified public accountant and tax expert at Intuit, maker of TurboTax, agrees because there are other credits available to parents besides the child tax credit that they can take advantage of, such as the earned income tax credit.

If the changes become law, Greene-Lewis told CNET that the current proposal suggests the IRS could make adjustments on its part without requiring affected taxpayers to amend their tax returns.

Always consult with your tax advisor for your individual tax needs.

How do I claim the child tax credit?

You can claim the child tax credit by entering your eligible children on your Form 1040 and attaching a completed Schedule 8812, Credits for Qualified Children and Other Dependents.

What happens if the credit is more than I owe in taxes?

This year’s child tax credit is not fully refundable. That means if your tax liability exceeds what you get from the credit, you’ll lose the difference.

You may still be able to claim the additional child tax credit, which refunds up to $1,600 per child. (To see if you qualify for the additional child tax credit, complete the IRS Form 8812 worksheet.)

If you paid for child care, you may also qualify for the child and dependent care credit. Depending on your circumstances, you can report between 20% and 35% of your child care expenses.

The maximum you can claim is $3,000 for one child under 13 or one disabled dependent, or $6,000 for two or more.

You are required to have earned income to qualify for this credit and care for your children must not have been provided by a spouse or family member.

Other federal income tax breaks available to families include adoption credits, education credits, and earned income tax credit.

Is there a state child tax credit?

More than a dozen states (California, Colorado, Idaho, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oklahoma, Oregon, Utah and Vermont) have some type of tax credit that benefits families, according to the National Conference of State Legislatures. Many others are considering implementing the tax exemption.

Requirements and benefits vary, so check with your state’s tax portal for details.

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