The Child Tax Credit 2024, a nonrefundable tax credit for taxpayers with dependent children under 17, was approved by the House Ways and Means Committee with a 40-3 vote.
Child Tax Credit 2024: A vital nonrefundable tax credit, the child tax credit (CTC) helps taxpayers who have dependent children under the age of 17. It can even completely eliminate their tax liability on a dollar-for-dollar basis.
On January 19, 2024, the Tax Relief for American Families and Workers Act of 2024 was decisively approved by the House Ways and Means Committee, with a remarkable vote of 40-3.
This all-encompassing plan contains provisions to raise the Code Sec. 179 deduction cap, postpone the obligation to deduct research and experimentation expenses, and extend the 100% bonus depreciation period until 2025. It also improves the child tax credit.
It also includes other pro-business initiatives, such as giving Taiwan tax treaty advantages and further tax relief due to disasters.
Taxpayers and their children must fulfil strict eligibility requirements, which take into consideration the child’s age and relationship to the person claiming them, in order to be eligible for the CTC.
Additionally, there are income limitations that affect how the credit phases out for higher earnings. In order to make a claim for the tax year 2023, the federal tax return (Form 1040 or 1040-SR) must be filed by April 15, 2024, or, if a tax extension is granted, by October 2024.
To ascertain the CTC amount and possible partial refund, taxpayers must also fill out Schedule 8812 (“Credits for Qualifying Children and Other Dependents”).
The child tax credit is to be increased by the proposed legislation. The proposed adjustments entail a per-child basis computation and would eliminate the current cap of $2,000 per kid with a refundable component of up to $1,600.
How soon will the IRS begin processing tax returns with Child Tax Credits?
In order to do this, multiply earned income over $2,500 by 15%, and then multiply the resulting amount by the total number of children.
This change is scheduled to take effect for the 2023, 2024, and 2025 tax years. Moreover, it is planned to raise the maximum refundable credit amount to $2,000 for 2025, $1,900 for 2024, and $1,800 for 2023.
In 2024 and 2025, the maximum amount of the child tax credit will likewise be increased for inflation.
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