The House introduced expansions to the Child Tax Credit 2024 scheme by passing a bill (The Tax Relief for American Families and Workers Act of 2024) last week. Low-income families with multiple children will find the benefits of this move to be extra relieving. The federal tax benefit works as financial aid for taxpaying families with dependent children below 17. The benefits can multiply to the extent that the credit may exponentially reduce one’s tax bill.
However, this credit can’t be availed by just everyone. Taxpayers must meet the eligibility criteria that lay out several checkpoints. Here’s what the CTC expansion would mean for qualifying families.
What does the Child Tax Credit 2024 expansion mean?
As per the current goings on, for every qualifying dependent below 17 years of age, the CTC goes up to $2000 each. $1600 of that can further be returned as a potential refund. If the bill gets the green light, the credit amount for a refund could go up to $1800 for 2023 tax returns. For the subsequent year, it would increment to $1900 and $2000 for 2025 tax returns.
The threshold for eligibility for CTC refunds is set at a household with $2500 in income. However, to fully qualify for credit, the eligible children should have a social security number valid for employment in the US.
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Qualifying pointers listed by the Internal Revenue Service:
- The child should be under the age of 17 at the of the year.
- The qualifying child must be either your son, daughter, stepchild, foster child (eligible), brother, sister, stepbrother, stepsister, half-brother, half-sister or a descendant of these, like a grandchild/ nephew/ niece.
- The child should provide half (or less) of their financial support during the year.
- The child should have lived with you for over half the year.
- Tax return should properly mention the child as your dependent.
- The child should not file a joint return with their partner for the tax year OR file it only to claim a refund of withheld income tax/ estimated tax paid.
- The child must be a US citizen, US nation, or US resident alien.
Find more information here: https://www.irs.gov/credits-deductions/individuals/child-tax-credit
If the Senate also approves the bill, low-income Americans will find the benefit coming to their aid the most. Lower-income families will also see a positive impact in enhancing tax credits for rental house constructions. The Hill estimates this number to stand at 200,000 housing units nationwide.
Tax Policy Center adds that households benefitting from the tax credit would be met with a tax cut of $680 in 2023. Nearly 50% of households with income under $21000 a year would benefit from the cut. A quarter of households with annual income less than $40,5000 will also fall in this category.
The top 1% of income earners, i.e. those with income above $980,000, would also be graced with the benefit. Overall, over 16% of Americans would see a lower tax bill.
Vikram Sharma is a globe-trotting journalist with a global perspective on international events. His articles offer readers a global perspective on international events, exploring complex geopolitical issues and providing insights into the world’s most pressing challenges.
