What is the Child Tax Credit?
The Child Tax Credit provides a partially refundable tax credit based on a parent’s modified adjusted gross income. A partially refundable credit means you can receive a portion of the credit even if you do not have income tax liabilities for the year. This means that if a parent qualifies and files taxes, they may claim the credit.
Can all parents claim the Child Tax Credit?
No. Only parents who file taxes and qualify under residency requirements and income limits can claim the Child Tax Credit.
Parents who have their main home in the U.S. for more than half of the year and have children who are 16 or younger on the last day of the year meet the residency requirement. U.S. military personnel and federal employees assigned outside of the U.S. also qualify.
There are income limits that apply to the Child Tax Credit. For 2024, a parent with the following modified adjusted gross income (MAGI) qualifies for the credit:
- $200,000 or less for those who file single, head of household, or married filing separately.
- $400,000 or less for those who file married filing jointly.
If taxpayers exceed those income limits, the credit is reduced by $50 for each $1,000 of additional income above the threshold until the credit reaches $0.
How much is the Child Tax Credit and what changed in 2024?
For 2024, the Child Tax Credit is up to $2,000 per qualifying child, which is the same amount that it was for tax year 2023. The most significant change for tax year 2024 is that the refundable portion of the Child Tax Credit increased from $1,600 to $1,700.
Are cash payments available for the Child Tax Credit?
No. For a portion of 2021, the IRS paid part of the Child Tax Credit in advance. Those advance payments were not available during 2022 or 2023 and will not be available for 2024 or 2025 unless there are changes to the current law. In early 2024 a billed passed the U.S. House that would have provided cash payments for the Child Tax Credit. However, that bill failed to pass in the Senate, and did not become law.
Do co-parents who share custody and support both get the Child Tax Credit?
No. If parents file taxes separately, the parent that claims the child as a dependent on their tax return receives the credit. If parents file separately and both try to claim the child as a dependent, the IRS only recognizes one parent’s claim. In these situations, the parent with whom the child primarily lives is typically permitted by the IRS to claim the child as a dependent. In short, there is one credit for each child.
Joint child custody agreements under a Parenting Plan may have provisions identifying who receives the credit. These agreements can, however, provide for alternating years or other creative solutions to ensure both parents share the tax benefits.
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Will the Child Tax Credit affect public benefits?
The Child Tax Credit has no impact on public benefits. The Child Tax Credit may be subject to offset for overdue taxes or other federal or state debts that taxpayers or their spouses owe. Additionally, money owed for child support, may also offset the Child Tax Credit.
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This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
