Taxes are a topic that everyone dislikes, but today we’re going to talk about a benefit that is extremely beneficial to American taxpayers: the child tax credit.
If you have small children at home (or dependents who count as such), this will be of interest. Let’s talk without strange technicalities and boring nonsense. Ready to stop the IRS from taking all of your money?
First, what is this about? So the government pats you on the back and says, “Here, for raising beautiful little humans.” That is essentially the child tax credit, a benefit that has been available since 1997.
Why does the Child Tax Credit exist?
In reality, this tax benefit began as a modest discount coupon, but it has grown over time. You can currently deduct up to $2,000 per child from your tax liability through 2025.
Are there any traps you are not aware of? If you pay more, you will not receive 100% of that amount in cash. Only $1,700 of the $2,000 is “refundable” (meaning that any money owed to you by the IRS will be added to your refund).
The rest simply lowers your debt. But be careful: this only applies until 2025. If it is not renewed by Congress, it will revert to $1,000 fixed and non-refundable by 2026.
Are you a candidate? Let’s check the requirements
Here comes the important thing: do you meet the vibes that the IRS is looking for? To start, your mini dependent must be:
- Under 17 years old at the end of 2024 (if you turn 17 in December, it does count!).
- Live with you at least half of the year (if he spent six months at grandma’s house, it does not apply).
- Not supporting yourself (you cover more than 50% of your expenses: food, school, children’s Netflix… whatever).
- Have papers in order: US citizen, legal or national resident, and a valid Social Security number before filing your taxes.
And what counts as a “child”?
Here, the IRS becomes more flexible: not just biological or adopted children. This also includes siblings, half-siblings, stepchildren, grandchildren, and nephews… Even if you are their legal guardian and meet the criteria! The IRS does not consider distant cousins or pets (although Fido is considered family).
Do you earn too much to qualify for the CTC?
The detail that hurts the most is that credit is not equal for everyone. If you are single and earn more than $200,000 per year, or if you are married and earn more than $400,000 combined, the amount is reduced by $50 for each $1,000 you exceed the limit.
If you are single and earn $210,000, you have exceeded $10,000. That equates to $500 less per child if you multiply 10 by $50. That is, instead of $2,000, you will receive $1,500. If you make $250,000, you are $50,000 over the limit: 50 multiplied by $50 equals $2,500 less. But don’t worry; credit cannot be negative. If they reduce it to zero, you will simply not receive it.
That concludes the CTC money you may be eligible for, as well as the requirements. If you have any questions, go to the IRS’s official website and look up Child Tax Credits.
