Raising children isn’t exactly cheap. From diapers to extracurricular activities, expenses pile up and seem like an endless list. That’s why the Child Tax Credit is a benefit worth considering. If you have children under 17, you can advantage from these tax credits that can help reduce your taxes or even provide extra money in the form of a refund.
Additionally, it’s not complicated at all; each year, when you file your taxes, you can request these benefits for each eligible child. For instance, next year in 2025, you’ll be able to claim it for the 2024 tax year. However, keep in mind that the real impact will be seen in 2026.
Who Can and Who Cannot Access the Child Tax Credit
It doesn’t depend on just one thing. Accessing the Child Tax Credit isn’t difficult, but it does have some requirements. The first is that children must be under 17 years old at the end of the fiscal year for which you’re requesting the benefit. Additionally, the child must live with you for at least half the year. And you also need to include them as a dependent on your tax return.
On the other hand, if you have a high income, the credit is reduced. Therefore, you must be within the established limits to receive the benefit, which, by the way, isn’t just for biological children, as adopted children are also included. However, in all cases, the children must have a valid Social Security number.
How Does the Child Tax Credit Work?
The best way to understand it is with an example. Imagine you owe $5000 in taxes and qualify for the tax credit. In this case, the tax credit will be deducted from what you owe. For instance, if you are eligible for $1700, your taxes will be reduced to $3300.
If the credit exceeds what you owe, you can receive the difference as a refund. For example, imagine your tax debt is $1000; then the remaining $700 would be paid to you as a refund.
The only thing you need to ensure is that all your documentation is in order, from proof of the child’s residence, their age, their relationship to you, etc.
What’s the Future of the Child Tax Credit?
For now, everything indicates that the Child Tax Credit will remain at $1700 per eligible child. However, it’s worth noting that this isn’t solely up to what the IRS says, as electoral promises following the recent elections could result in a much higher amount. Remember that Republicans mentioned the possibility of a check for up to $5000?
Obviously, this increase would be significant, far exceeding any previous support received under this program.
In summary, this is a highly valuable benefit that helps millions of Americans and is worth paying attention to, especially if you have children within the qualifying age range or are expecting.
In the meantime, it’s advisable to stay informed about the initial steps the new administration takes regarding the application of this tax credit—something we’ll likely see in the early months of Donald Trump’s new term.