In the initial week of tax season, the IRS received almost 15 million returns. Generally speaking, if you anticipate receiving a tax refund, you should file your tax return as soon as possible to expedite the process of receiving your money. On the other hand, you might want to wait to file if you have kids and have stated the child tax credit this year. This is a result of the Senate’s current consideration of raising the child tax credit.
Child Tax Credit; Source- NPR
Maximum Child Tax Credit
Both the current and the credit that Congress is trying to pass for the child tax credit are partially refundable, which means that you can receive a refund for a portion of the benefit even if you are not liable for any taxes. As of December 31, 2023, the maximum tax credit allowed per child is $2,000 for each child under the age of 17. This year, only a portion up to $1,600 per child is refundable. The increased child tax credit for 2021 was $3,600 for kids under five and $3,000 for those between the ages of six and seventeen. That’s not the situation anymore. On December 31, the minimum age was also briefly increased to under 18, but that has already been removed.
Eligibility Criteria For Child Tax Credit
These requirements must be met by you as well as your family to qualify for this year’s tax relief. You meet the eligibility requirements if your modified adjusted gross income (MAGI) is $200,000 or less, or $400,000 if you’re filing jointly.
On December 31, 2023, the child for whom you are requesting credit was younger than 17 years old. Their Social Security number is up to date. They may be your sibling, stepchild, foster child, legally recognized child, half-brother, half-sister, or a decedent of one of these (such as a granddaughter, niece, or nephew). In the applicable tax year, they have led no more than 50% of their funds. They have spent more than half the year residing with you. On your tax return, you are listing them as a dependant. You are a resident alien or a citizen of the US.
Child Tax Credit Based On MAGI
Your child tax credit will be reduced by $50 for each $1,000 over the upper limit if your MAGI is greater than the income restrictions. For instance, if your individual MAGI was $210,000, you might assert $1,500 for each qualified child. At $240,000 for individuals along with $480,000 for married individuals filing jointly, the child tax credit is fully phased out. Child poverty reached a historic low in 2021 thanks to the temporary expansion of the child tax credit by Congress as part of a large COVID-19 aid package. The credit reverted to its pre-pandemic rate in 2022 after Congress decided not to prolong the enhanced credit.
The more moderate new regulations for the $2,000 child tax credit, if passed, would apply to the next three tax years: 2023, 2024, and 2025. If authorized, you could file your 2023 tax returns this tax season and get the enlarged benefit. The current proposal for the child tax credit would keep it partially refundable, meaning that you could receive a refund for a portion of the credit even if you didn’t owe any taxes. Additionally, the maximum refundable amount per kid would increase from $1,600 to $1,800 in the tax year 2023, $1,900 in the tax year 2024, and $2,000 in the tax year 2025. The amounts for 2024 and 2025 are going to be adjusted for inflation.
