Child Tax Credit: How to apply, and what changes will it have in 2024

The Child Tax Credit (CTC) is a tax benefit provided to eligible families with qualifying dependent children. It was created in 1997 as part of the Taxpayer Relief Act of 1997, with the goal to help reduce the financial burden on families with children. Currently, it provides $2,000 in tax relief per child, with 1,400 being refundable.

In 2021, the CTC was expanded after the passage of the American Rescue Plan. That year the tax was raised to $3,600 per child under the age of six, $3,000 per child between ages 6 to 17, and it was also made fully refundable. In 2022, it was reverted.

According to the White House website, thanks to the CTC, “most families are automatically receiving monthly payments of $250 or $300 per child without having to take any action.” Here’s what you need to know about the tax credit.

Who qualifies for the CTC?

Americans can claim the CTC for each qualifying child who has a valid Social Security number for employment in the U.S. According to the IRS, the dependent must have the following requirements.

• Be under age 17 at the end of the current year.
• Is a son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of those.
• Provide no more than half of their own support during the year.
• Have lived with the person who claims the credit for more than half the year.
• Be claimed as a dependent on their tax return.
• Have been a U.S. citizen, U.S. national or U.S. resident alien.

Those who meet all eligibility factors and whose annual income is no more than 200,000 can qualify for the full amount of the Child Tax Credit for each qualifying child. Anyone can check if they qualify on the IRS website.

How to claim the Child Tax Credit?

The Child Tax Credit can be claimed by entering the children and other dependents on Form 1040, U.S. Individual Income Tax Return, and attaching the Schedule 8812, Credits for Qualifying Children and other Dependents.

Those who have filed tax returns for 2019 or 2020, or who have signed up to receive a stimulus check from the IRS, will get the CTC automatically. They don’t need to sign up.

Can I receive the benefit if I haven’t filed taxes?

The IRS says that not everyone is required to file taxes. “While the deadline to sign up for monthly Child Tax Credit payments this year was November 15, you can still claim the full credit of up to $3,600 per child by filing a tax return next year.”

Can the Child Tax Credit affect other government benefits?

No. The CTC won’t change the amount people receive in other Federal benefits, like unemployment insurance or Medicaid.

How will the Child Tax Credit change in 2024

On January 19, 2024, the House Ways and Means Committee approved the Tax Relief for American Families and Workers Act of 2024. The proposed bill seeks to expand the CTC, currently set at $2,000 per child with a refundable portion of up to $1,600. The changes involve a per-child basis calculation, multiplying earned income exceeding $2,500 by 15 percent and then by the total number of children. These modifications are expected to apply to the 2023-2025 tax years, with the maximum refundable credit increasing to $1,800 for 2023, $1,900 for 2024, and $2,000 for 2025. The overall CTC maximum will also be adjusted for inflation in 2024 and 2025.

For tax year 2023, filing the federal tax return (Form 1040 or 1040-SR) by April 15, 2024, or October 2024 with an extension is required. Completing Schedule 8812 is necessary to determine the CTC amount and potential refund.

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