12/15/2024
Here's everything you need to know about the Child Tax Credit
CHILD TAX CREDIT EXPLAINED
We're breaking down the child tax credit in a way that a toddler can understand...........in a nutshell, you could get up to $2000 per each qualifying child age 16 and younger (less than 17 on December 31st). The IRS defines the age of a child by the age they are on December 31st. So basically, if your child turned 17 at any point during 2024, they will not qualify for the child tax credit in 2025 when you file. THAT DOES NOT MEAN THAT YOU ARE NOT ALLOWED TO CLAIM YOUR CHILDREN WHO ARE 17 AND OLDER AS A DEPENDENT ON YOUR TAX RETURN, NEITHER DOES IT MEAN THAT YOU WILL ONLY GET BACK $2000 PER CHILD (continue reading). There are other credits for children ages 17-23, and for other dependents and household member that you support of all ages.
$1,700/child of the child tax credit is refundable and will be fully refundable if your tax liability is $0. The $1,700 portion is also called the ACTC or Additional Child Tax Credit. So if you have 4 dependents that are between the ages of 0-16 and your tax liability is $0 then, I can potentially ADD a $6,800 BOOST to your tax refund.
I hear you asking...What does refundable mean actually?
Refundable credits are the portion of the tax credit that you could get back in the form of a tax refund, in excess of the amount you owe. For example, if you don't owe any taxes that means your tax liability is $0 and you will get the full amount added to your refund check! Under the assumption that you qualify to claim that credit.
There are more credits for people who support children and dependents:
Other Dependent Tax Credit
American Opportunity Tax Credit
Child Dependent Care Credit
Earned Income Tax Credits & more
I will be breaking these down soon!
CTC/ACTC begins to decrease in value if your adjusted gross incomes exceed $200,000 ($400,000 for Married Filing Jointly).
ACTC is not allowed if you or your spouse (if filing a joint return) file a Form 2555 or Form 2555EZ (excluding foreign earned income).
Please don't worry about remembering all of this - we got you covered!
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