The government’s American Rescue Plan is meant to help people in the United States who have been badly affected by the COVID-19 virus. A big part of this plan is to help families out financially by giving them more money through the Child Tax Credit.
Families could get up to $2,000 for each child before, but now they can get up to $3,000, and in 2024, they will be able to get an extra $600. The Internal Revenue Service (IRS) runs the program, which gives families, especially those with kids younger than 17, money based on certain requirements in order to help them.
Eligibility for the Child Tax Credit
To be eligible for the IRS CTC:
- By the end of the tax year, the child must be younger than 18 years old.
- You must be the child’s original or adoptive parent, stepparent, foster parent, or a family member who gives them more than half of their money. In this group are siblings, grandkids, nieces, and nephews.
- You need to list the child as a dependent on your tax return.
- You must make less than a certain amount of money to get the full credit amount. The most a married couple can claim is $200,000 when they file equally. The phase-out starts at $100,000 for everyone else.
Increase in Child Tax Credit Amounts
The Act made the CTC amount a lot bigger. The credit for kids younger than 6 years old was raised to $3,600 per kid. The credit was set at $3,000 per child between the ages of 6 and 17.
This change raised the CTC from $2,000 to $4,000 per child under 16 years old. The amount of the credit that could be returned was capped at $1,400 per child. For tax years 2022 through 2025, this factor was changed so that the refundable amount would rise with inflation and hit $1,600 in 2023.
Full Refundability
That you can get your full Child Tax Credit (CTC) back was one of the most important changes to the CTC. Low-income people could only get a portion of the credit before this change if their tax bill wasn’t high enough to claim the full amount.
With the full refundability change, however, these families can now get the full credit, no matter how much money they make. A family will get a tax return for the difference if their tax bill is less than the total credit amount.
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How to File for the USA Child Tax Credit?
Here’s a detailed step-by-step guide to the Child Tax Credit (CTC):
- Use the IRS Form 1040 to file your taxes. The Child Tax Credit is claimed in these forms’ “Credits” section.
- If you’re claiming the Additional Child Tax Credit (ACTC), the refundable portion of the CTC, you may need to fill out Schedule 8812 and attach it to your Form 1040.
- Provide the required details for each qualifying child on your Form 1040.
- Consider e-filing your tax return through IRS-approved software for faster processing and refunds.
- If you prefer to file a paper return, mail it to the IRS at the address listed for your specific state on the IRS website.