The Child Tax Credit (CTC) is designed to offer a tax break to qualifying families with one or more children. So how much is it worth? The Child Tax Credit 2024 maximum is $2,000 per qualifying child.
Part of the credit, referred to as the Additional Child Tax Credit (ACTC), is refundable. The refundable portion is worth up to $1,700 per qualifying child.
Here’s more on how Child Tax Credit payments for 2024 work.
Key Points
• The Child Tax Credit (CTC) for 2024 provides a tax break of up to $2,000 per qualifying child.
• The Additional Child Tax Credit (ACTC) offers a refundable portion of up to $1,700 per qualifying child.
• Qualifying children must be under age 17 at the end of 2024 and meet other specific dependency criteria, including residency and relationship requirements.
• The CTC is available to all qualifying tax filers, but those earning over $200,000 as single filers or $400,000 as couples will receive a reduced credit.
• The CTC significantly benefits lower- and middle-income households by reducing tax liability and providing potential refunds.
What Is the Child Tax Credit?
There are two main types of taxes most people have to deal with: federal and state. The IRS, or Internal Revenue Service, is in charge of collecting federal income tax as well as extending tax credits and other tax breaks to eligible filers.
The Child Tax Credit is a federal tax credit for families with qualifying children. Whether you’re filing taxes for the first time or the 20th, it’s to your advantage to claim every credit you’re eligible for, especially if you have kids.
Here are a few key takeaways to know about the credit:
• Parents and guardians of qualifying children may be eligible to claim the Child Tax Credit even if they don’t normally file a tax return.
• Unlike some family-oriented tax credits, the Child Tax Credit is not limited exclusively to lower-income households. In other words, what tax bracket you are in or income you earn is not a determining factor.
• Child Tax Credit maximums and income thresholds are adjusted periodically to reflect changes to the Internal Revenue Code.
The Child Tax Credit is distinct from the Child and Dependent Care Credit, which helps families recover some of the money they pay for child care so they can work. It’s possible to claim the Child Tax Credit alongside one or more deductions, which reduce your taxable income.
Using a money tracker can help you keep up with expenses that may qualify for tax deductions each year. You can also adjust your income tax withholding through your employer to ensure the right amount of tax is being taken out of your paychecks.
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How Much Is the Child Tax Credit?
Here’s how much the Child Tax Credit is for 2024: The amount is $2,000 per qualifying child. Some points to note:
• The $2,000 amount is the most you could qualify for per child if you’re eligible to claim this credit. The amount of the credit you can claim is reduced by $50 for every $1,000 you earn above $200,000 for single filers or above $400,000 for joint filers.
• Part of the Child Tax Credit is refundable, which means that if you owe less in taxes than the amount of the credit you qualify for, you can get the difference back as a refund. The refundable part of the Child Tax Credit is called the Additional Child Tax Credit (ACTC), and it maxes out at $1,700 per qualifying child.
The IRS decides how much of the Additional Child Tax Credit you qualify for using this formula:
You can do the math yourself or use tax preparation software to crunch the numbers. Or you might work with a tax professional.
How the Child Tax Credit Works
The Child Tax Credit works by reducing the amount of tax you owe when you file your return.
• First, here’s how to qualify. Each child to be claimed must:
• Have a Social Security number
• Be under age 17 at the end of 2024
• Be claimed as a dependent on your tax return
• Be a U.S. citizen, U.S. national, or U.S. resident alien
• Be your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these (for example, a grandchild, niece, or nephew)
• Not provide more than half of his or her own support for the tax year
• Have lived with you for more than half the tax year
Now, here’s the simple version of what it means to claim the Child Tax Credit.
• Depending on how much you owe, the child tax credit can reduce your tax to $0.
• If your Child Tax Credit is more than the amount you owe, you may be eligible for the Additional Child Tax Credit, or ACTC.
• The ACTC lets you get the portion of the credit you didn’t apply to your tax liability back as a refund, up to the $1,700 per child limit.
To claim a tax child credit for 2024, you’ll need to file an income tax return using Form 1040 and complete Schedule 8812, Credits for Qualifying Children and Dependents. This form asks you questions about your child, income, and filing status to determine if you’re eligible for the Child Tax Credit (or Additional Child Tax Credit) and the amount.
Again, if you’re using reliable tax prep software, your program should walk you through the questions you need to answer. And if you expect to get money back from taxes in a refund, using an online budget planner can help you figure out how to make the most of it.
Benefits of the Child Tax Credit
The primary benefit of the Child Tax Credit is that it can reduce what you pay in taxes to the IRS. Tax credits are amounts that reduce your tax liability, or the amount you owe, on a dollar-for-dollar basis. So, if you owe $1,000 in taxes and qualify for a $1,000 tax credit, the credit could bring your tax bill down to $0.
The Child Tax Credit, along with other credits, helps you pay less in taxes and keep more of your money. On a broader scale, research shows that the Child Tax Credit helps to:
• Reduce poverty and financial hardship
• Improve housing affordability for families
• Improve long-term educational, financial, and health outcomes for children
• Produce greater economic stability overall
While the credit is available to higher-income families, it primarily benefits lower- and middle-income households.
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Child Tax Credit History
The Child Tax Credit was created by the Taxpayer Relief Act of 1997 to ease the financial burdens associated with raising children. In its earliest form, the credit was generally nonrefundable and its availability was limited to middle- and upper-middle-class taxpayers.
Since inception, lawmakers have taken steps to:
• Adjust income thresholds for eligibility
• Raise (or lower) the amount of the credit
• Redefine what it means to be a qualifying child
The most recent round of changes came in 2017 with the passage of the Tax Cuts and Jobs Act. Under the Act, the credit was expanded to allow more families to claim it.
Did the Child Tax Credit pass for 2024? Yes, it’s still available in its expanded form under the TCJA.
However, without congressional intervention, the limits will revert to their pre-2017 levels beginning in January 2026. That would put the maximum child tax credit at $1,000 while the maximum age for dependents would drop to 16.
Child Tax Credit Eligibility
If you’re preparing for tax season, you might be wondering if you’re eligible for the Child Tax Credit. The IRS has a few requirements you’ll need to meet to claim the child tax credit, as noted above. First, you must have a qualifying child who is:
• Under 17 at the end of the tax year
• Your son, daughter, stepchild, eligible foster child, brother, sister, stepsibling, half-sibling, or a descendant of one of these, such as a grandchild, niece, or nephew
• Reliant on you for more than half of their support for the tax year
• Living with you or has lived with you more than half the tax year
• Eligible to be claimed as a dependent on your return
• Not filing a joint return themselves
• A U.S. citizen, U.S. national, or resident alien
The child must also have a valid Social Security number that was issued before the tax filing deadline. If they don’t, it would be a tax filing mistake to claim the Child Tax Credit.
For parents, the primary requirement is income-based. If your income is below $200,000 as a single filer or $400,000 for joint filers, you may be eligible to claim the full credit. Those who earn above that amount (considerably higher than the average salary in the U.S.) may be eligible for a lesser amount.
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The Takeaway
The income tax child credit for 2024 could be a valuable tax break if you’re raising one or more children. Understanding how the Child Tax Credit works, when you can claim it, and what it’s worth can help you maximize your potential tax savings. Keeping on top of your potential tax credits is an important aspect of tracking your finances and managing your money well.
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FAQ
How does the Child Tax Credit work?
The Child Tax Credit works by reducing your tax liability on a dollar-for-dollar basis. The Additional Child Tax Credit is the refundable part of the Child Tax Credit. The amount of the credit you qualify for depends on your filing status and household income.
Why am I only getting $2000 for the Child Tax Credit?
The Child Tax Credit maximum is $2,000 per qualifying child. If you file your tax return with just one qualifying child listed, the most you could claim for the credit is $2,000.
What is the $3600 Child Tax Credit?
The $3,600 Child Tax Credit was a temporary benefit granted to eligible families under the American Rescue Act. For 2021, families were eligible to receive up to $3,600 in Child Tax Credit for each qualifying child under 6 and $3,000 for each qualifying child under 18. The purpose of the expanded credit was to provide financial relief to households that were struggling as a result of the COVID-19 pandemic.
How much is the 2024 Child Tax Credit?
The 2024 Child Tax Credit allows a credit of up to $2,000 per qualifying child. The Additional Child Tax Credit, which is the refundable portion of the Child Tax Credit, is worth up to $1,700 per qualifying child.
How much is each dependent worth on taxes in 2024?
If you’re filing taxes with one or more qualifying children listed as dependents, you could claim a Child Tax Credit worth up to $2,000 per child. You could also claim the Additional Child Tax Credit, which is worth up to $1,700 per child. Eligibility is based on several factors, including your child’s age, your income, and your tax filing status.
Is the Child Tax Credit 2024 true or false?
The Child Tax Credit is a legitimate tax break that families with qualifying children may claim for the 2024 tax year. Whether you can claim the full amount of the credit hinges on your income and filing status, as the credit begins to phase out once your income reaches a certain threshold.
About the author
Rebecca Lake
Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.
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