Congress is drafting legislation to increase the amount of money sent to families with lower earnings with children. The CTC might be increased by raising the maximum recoverable amount per kid over the following three years under the Tax Reduction for American Couples and Employers Act of 2024.
New Child Tax Credit 2024
On Capitol Hill on Thursday, Internal Revenue Service Commissioner Danny Werfel informed legislators that his organization is “ready to proceed expeditiously” on a nonpartisan tax bill that would bring back some corporate tax advantages and temporarily increase the child tax credit.
The child tax credit would remain entirely returnable, so even if you owed no taxes, you may still receive a refund for a portion of the benefit. The highest possible score refundable amount will increase from $1,600 per child under the new regulations.
It would rise to $1,800 for the 2023 tax year, $1,900 for the 2024 tax year, and $2,000 for the 2025 tax year. Inflation adjustments would be made to the payments for 2024 and 2025.
You can only utilize the tax credit towards the taxes you owe; if your tax bill drops to zero, you will not be eligible for any more funds. Consequently, the remaining $2,000 after the portion that is refundable $200 for tax year 2023 would be irreversible.
Who is eligible for the New CTC 2024?
The new credit’s qualifying requirements would be comparable to those of the current, non-pandemic kid tax credit. This year, for you as well as your family to qualify for the tax reduction, the following conditions must be met:
- You meet the eligibility requirements if your modified adjusted gross income (MAGI) is $200,000 or less, or $400,000 if you’re submitting jointly.
- On December 31, 2023, the child for whom you are requesting credit was younger than 17 years old.
- The child’s Social Security number is up to date.
- They may be your sibling, stepchild, adoptive child, legally binding child, half-brother or half-sibling, or a descendant of one of these such as a grandchild, niece, or nephew.
- They haven’t given more than half of their own money throughout the applicable tax year.
- Your child must spend over six months of the year residing with you.
- The child tax credit’s refundable variant requires taxpayers to make at least $2,500 to be eligible. For taxes submitted in 2025 and 2026, or tax years 2024 and 2025, filers may choose to use your earned income from the previous year or the present one to satisfy this condition.
- You are an immigrant or a citizen of the US.
When will you expect to receive the New Child Tax Credit?
During Werfel’s testimony before the U.S. House Committee on Means and Ways, which writes tax laws, lawmakers requested his assurance that should the new law be passed, taxpayers are going to benefit during this filing season.
The commissioner informed the lawmakers that the IRS pays “extremely close attention” to the legislation’s development.
Taxpayers shouldn’t wait for this law to take effect before submitting their taxes; relying on the final wording of the bill, we might be able to begin implementing it as soon as six to twelve weeks after enactment.
Any further reimbursements owed to individuals who have submitted their taxes will be handled by us. They won’t have to do anything more. If the bill is approved, the refundable part maximum would be gradually raised from $1,800 to $1,900 to $2,000 for each tax year between 2023 and 2025, increasing the child tax credit.
What is the main purpose of the New Child Tax Credit 2024?
In 2024, Democrats and the extraordinarily fractured House GOP majority can work together to enhance the tax credit. Implementing this law ought to be the most important matter when the Senate reconvenes on the final day of the month.
Child poverty was 13.7 percent in 2018. After the child credit went into full force in 2021, it decreased to 5.2 percent. But in 2022, child poverty spiked back up to 12.4% after the credit expansion ended.
The House bill does, however, have the advantage of concentrating its benefits on the lowest-income households. The plan has the potential to elevate at least half a million kids out of poverty.
A new child tax credit idea might help 16 million of the 19 million children who get a portion of the full credit because of poor family incomes, according to estimates from the CBPP.
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