Child Tax Credit 2024: Should You Keep Waiting to File?
An expansion to the child tax credit is still in the works, and until a bill gets passed, you may be wondering whether you should go ahead and file your taxes.
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Congress is still working on a potential expansion to the child tax credit for tax years 2023 through 2025. Until that happens, you may be wondering whether it's best to hold off on filing your tax return or to go ahead and submit it if you're claiming the credit. We'll help you find out what's going and what you should do.
The child tax credit -- both the current credit and the one making its way through Congress -- is partially refundable, meaning that for a part of the credit you can get a refund even if you don't owe any tax. The remainder is nonrefundable, so you can use that part of the tax credit only against taxes you owe. We'll explain the requirements that must be met to be eligible for the child tax credit in 2024.
The maximum tax credit available per kid is $2,000 for each child under 17 on Dec. 31, 2023. Only a portion is refundable this year, up to $1,600 per child.
For tax year 2021, the expanded child tax credit was $3,600 for children five and under, and $3,000 for children ages six to 17. That's no longer the case. The age requirement was also temporarily extended to under 18 on Dec. 31, but that's also gone.
If your MAGI is higher than the income limits, the amount of child tax credit you receive will decrease by $50 for every $1,000 above the limit. For example, a MAGI of $210,000 as an individual would allow you to claim $1,500 for each eligible child.
The child tax credit is phased out completely at $240,000 for individuals and $480,000 for married couples filing jointly.
Note: If you search online for information on the child tax credit, you may come across details on the 2021 expanded tax breaks, so double-check that you're viewing the most recent information.
Mark Steber, chief tax information officer at Jackson-Hewitt, says many government sites keep historical information live "for people playing catch-up with their taxes."
Will Congress expand the child tax credit in 2024?
As part of a massive COVID-19 aid package, Congress in 2021 temporarily expanded the child tax credit, which helped drive child poverty to a record low. Congress didn't extend the expanded credit in 2022, and the credit returned to its pre-pandemic rate.
If approved, the new rules around the $2,000 child tax credit would be more modest and cover three tax years: 2023, 2024 and 2025. That means if it's approved you could claim the expanded credit this tax season when you file your 2023 tax returns.
As proposed right now, the new child tax credit would continue to be partially refundable (so, for a part of the credit you could get a refund even if you didn't owe any tax) and the new rules would increase the maximum refundable amount per child from $1,600 per child to $1,800 in tax year 2023, to $1,900 in tax year 2024 and to $2,000 in tax year 2025, with the 2024 and 2025 amounts adjusted for inflation.
The remainder of the $2,000 after the refundable amount ($200 for tax year 2023) would be nonrefundable, so you could use the tax credit only against taxes you owe -- after your tax bill hits $0, you won't get additional money.
Should I wait to file my tax return or file as soon as I can?
Though the proposed changes have cleared the House, it's up in the air whether the Senate will approve the bill. Until the legislation is actually signed into law, you may wonder if you should hold off on filing your tax return.
IRS Commissioner Daniel Werfel said don't wait. In testimony before the House Ways and Means Committee on Feb. 15, Werfel said, "Taxpayers should not wait for this legislation to file their returns. We will take care of getting any additional refunds to taxpayers who have already filed. They won't need to take additional steps," such as filing an amended return.
On Feb. 21, the IRS released a statement saying they will "automatically make adjustments for those who have already filed so no additional action will be needed by those eligible taxpayers."