HPP: The child tax credit will be available to American families in 2025 when they file their 2024 tax returns. Parents and legal guardians of minors who fulfill specific age and residency requirements are eligible for this benefit.
It has become a vital tax break for millions of families since it was put into effect in 1997.
As long as the child is younger than 17 at the end of the tax year, the Child Tax Credit program continues to provide up to $2,000 for each eligible minor.
Families who do not have a large tax liability can still receive a check because $1,700 of this sum is refundable.
Additional prerequisites for the child tax credit in 2025
For the household to be eligible for the child tax credit, the children must also live with the taxpayer for more than half of the tax year and have a valid Social Security number.
Families with adjusted gross incomes up to $200,000 on individual taxes and $400,000 on couple returns are eligible for the full benefit. The total credit amount will be lowered proportionately for those with greater salaries.
The 2024 credit is unchanged from 2023, when it was likewise $2,000 per eligible youngster. This stands in contrast to the American Rescue Plan’s brief extension of the credit during the pandemic, which allowed up to $3,600 per child. Child poverty rates significantly increased as a result of this measure’s 2022 expiration.
Without legislative action, the credit will drop to $1,000 per child in 2026, which can have a detrimental effect on families’ tax returns.
Don’t miss these crucial tax filing dates
The IRS calculates that billions of dollars in tax credits, such as the Child Tax Credit, are not claimed annually. The main causes of this are eligible households’ ignorance or restricted access to tax preparation resources.
The Free File program will launch on January 12 and the tax filing system will be made available by the Internal Revenue Service (IRS) by January 29, 2025. Unless tax extension is granted, the general deadline for filing returns is April 15.
Remember that a filing extension does not postpone the due date for paying taxes. Interest and penalties will be applied to any unpaid balance after April 15.
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Numbers of child tax credits in other years
The American Rescue Plan temporarily increased the Child Tax Credit during the COVID-19 outbreak.
With a total benefit of up to $3,600 per qualified child, this led to monthly payments of up to $300 for children under the age of six and $250 for children between the ages of six and seventeen.
According to Census Bureau estimates, this action contributed to a 46% decrease in child poverty in the United States.
Expanded credit payments helped keep 3.7 million kids out of poverty in 2021. However, much of the progress was erased when the expansion ended in 2022, and child poverty rates increased dramatically from 5.2% to 12.4%.
In 2021, over 92% of qualified households applied for the credit, according to a research by the Urban Institute.
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Nevertheless, the benefit was not utilized by 8% of households, mostly those with low incomes and no access to tax preparation services.
The Child Tax Credit offered up to $400 per eligible child in its initial year. By 2001, this sum had risen to $600, and it has subsequently increased consistently.
According to statistics, 39% of families use it to pay for housing, including rent or a mortgage, and 67% of families use it to purchase food. However, 29% also use it to pay for necessities like water and electricity.