What Are Ten Facts about the Child Tax Credit?

By Tennant Mansfield | December 8th, 2023

  The Child Tax Credit is a government program that aims to provide financial assistance to families with children. As a taxpayer, it is essential to understand the details of this credit in order to maximize its benefits.

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The Video What Are Ten Facts about the Child Tax Credit?

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  • As a taxpayer, it is essential to understand the details of this credit in order to maximize its benefits. Here are ten important facts about the Child Tax Credit:

    1. Eligibility: To qualify for the Child Tax Credit, you must be a U.S. citizen or resident alien and have a child who is under the age of 17 at the end of the tax year.


    2. Maximum Credit: The maximum amount you can claim for each qualifying child is $2,000. This credit is non-refundable, which means it can reduce the amount of tax you owe but cannot provide you with a refund beyond the tax liability.


    3. Additional Child Tax Credit: If the Child Tax Credit exceeds your tax liability, you may be eligible for the Additional Child Tax Credit, which can provide you with a refund of up to $1,400 per qualifying child.


    4. Income Limitations: The Child Tax Credit starts to phase out for individuals earning an annual income of $75,000 or more, or $150,000 or more for married couples filing jointly. The credit is gradually reduced by $50 for every $1,000 of income above these thresholds.


    5. Social Security Number Requirement: You must provide a valid Social Security number for each child you claim the credit for. This ensures that all individuals benefiting from the credit are legally eligible.


    6. Dependent Qualification: To claim the Child Tax Credit, the child must meet the criteria of being your dependent, which includes residency, relationship, age, and support.


    7. Noncustodial Parents: In certain cases, the noncustodial parent may be eligible to claim the Child Tax Credit if the custodial parent releases the claim using Form 8332 or a similar statement.


    8. Adoption and Foster Care: If you have adopted a child or have foster children, you may still qualify for the Child Tax Credit, provided they meet the necessary criteria.


    9. Refundable Portion: Up to $1,400 of the Child Tax Credit is refundable, meaning that if your tax liability is reduced to zero by claiming the credit, you may be eligible to receive the remaining amount as a refund.


    10. Changes Made in 2021: The American Rescue Plan Act of 2021 expanded the Child Tax Credit for the 2021 tax year. The maximum credit amount was increased to $3,600 for children under 6 and $3,000 for children aged 6 to 17. Additionally, the credit is fully refundable, and advance payments of the credit will be made to eligible families from July to December 2021.


    Understanding the Child Tax Credit and its complexities can significantly impact your finances. By staying informed and taking advantage of the available benefits, you can ensure the well-being and financial security of your family.

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