What to Know About Changes to Child Tax Credits for 2024

As tax season approaches, many hardworking families are looking for ways to make the most of their tax benefits. One crucial area of focus is the Child Tax Credit (CTC), a vital lifeline for parents trying to provide for their children. Over the years, this credit has evolved, and as we look ahead to the 2024 tax season, it’s essential to understand what to expect.

The Child Tax Credit was significantly expanded during the pandemic, providing much-needed relief to families facing unprecedented challenges. However, as these temporary measures come to an end, understanding how the CTC will function in 2024 is key to planning effectively and avoiding any surprises when it’s time to file your taxes.

What Is the Child Tax Credit for 2024?

For the 2024 tax year, the Child Tax Credit continues to be a nonrefundable credit available to taxpayers with dependent children under 17. This credit can help reduce your tax bill dollar for dollar, offering significant financial support for families. If your modified adjusted gross income (MAGI) is $400,000 or below for married couples filing jointly or $200,000 or below for other filers, you can claim $2,000 for each qualifying child.

However, for many families, it’s important to be aware that if your income exceeds these thresholds, your credit may be reduced. For example, married couples filing jointly may see their Child Tax Credit decline if their adjusted gross income goes above $400,000, while all other taxpayers will notice a reduction if they surpass $200,000.

If you find yourself in a position where you owe zero taxes, you can still benefit from the Additional Child Tax Credit (ACTC), which allows you to receive a partial refund, though this is capped at $1,400 per qualifying child. Additionally, if you’re subject to the alternative minimum tax (AMT), which often affects higher-income individuals, this may further limit your ability to claim the Child Tax Credit.

For 2024, the refundable portion of the credit is up to $1,700, an increase from $1,600 in 2023, providing a little more help to families during tax time. Just keep in mind that this credit will be claimed on tax returns filed in 2025.

Who Qualifies for the Child Tax Credit?

To qualify for the Child Tax Credit, there are several requirements that both you and your child must meet. These include age, relationship, dependent status, residency, financial support, citizenship, and income.

Your child must be under 17 years old at the end of the tax year, and they must be a close relative (like a son, daughter, stepchild, or even a sibling). You need to be able to claim the child as a dependent, and they should not file a joint tax return unless it’s just to claim a refund of withheld taxes.

It’s also essential that your child has lived with you for more than half the year, although there are some exceptions to this rule. You should provide at least half of the child’s financial support during the previous year. If your child has been supporting themselves for more than six months, they likely don’t qualify. According to IRS guidelines, your child must be a U.S. citizen, U.S. national, or U.S. resident alien, holding a valid Social Security number.

Of course, income is also a factor. If your income exceeds certain limits, your credit will be reduced until it’s eliminated. This means it’s crucial to monitor your modified adjusted gross income as you prepare your taxes.

How Do Changes in Congress Impact the Child Tax Credit?

The future of the Child Tax Credit is a topic of ongoing debate in Congress. While there have been attempts to expand the credit, no bipartisan agreement has been reached. This uncertainty can be concerning for families who rely on these credits to help make ends meet.

Recent legislative efforts to extend the Child Tax Credit have stalled. A bipartisan tax package aimed at expanding the credit failed to pass the U.S. Senate in late 2023. The Center on Budget and Policy Priorities (CBPP) estimated that this expansion could have helped up to 16 million children who currently miss out on the full credit because of income limitations, lifting nearly 400,000 children out of poverty in the process.

With Congress yet to pass any new laws regarding the Child Tax Credit, families may need to brace themselves for potentially smaller credits and reduced benefits as they plan for the upcoming tax season.

How Can You Claim the Child Tax Credit?

Claiming the 2024 Child Tax Credit is an important step for families looking to maximize their tax return. To do this, you’ll file your tax return in 2025 using Form 1040 or 1040-SR. However, navigating the tax filing process can be complicated, especially with the potential changes to the Child Tax Credit.

This is where a trusted tax professional can make a significant difference. They will ensure that you complete Schedule 8812, which is essential for determining your credit amount and any refundable portion you may qualify for. By working with an expert, you can rest assured that you’re accurately reporting your information and claiming the maximum credit possible.

Don’t leave money on the table or increase your risk of getting audited–enlist the help of a knowledgeable tax professional to guide you through the claiming process and help you get the most out of your tax return. Their expertise will provide peace of mind, allowing you to focus on what truly matters: supporting your family.

Why Should You Work with a Tax Specialist?

With the upcoming changes to the Child Tax Credit, it’s more crucial than ever to consider working with a knowledgeable tax specialist. While claiming the credit might seem straightforward, understanding the nuances of tax law and how it impacts your unique situation can be complex. Small errors could lead to losing out on valuable benefits, which is the last thing any hardworking family needs.

The skilled tax professionals of Gudorf Tax Group can help you navigate these changes, ensuring you maximize your credits and avoid common pitfalls in your tax filing. Their expertise will be invaluable in helping you take full advantage of available deductions and credits, providing much-needed support during a challenging time.

Schedule a Consultation with Gudorf Tax Group Today

As tax season approaches, the Child Tax Credit stands out as a crucial resource for families dedicated to providing for their children. Don't let confusion or uncertainty cost you the benefits you're entitled to. With decades of experience helping families like yours navigate the complexities of tax preparation, the knowledgeable and friendly tax specialists at Gudorf Tax Group are here to ensure you maximize your credits and deductions. Schedule an appointment today with the accounting and tax preparation professionals at Gudorf Tax Group.