Stay informed about the latest updates on the highly anticipated $1,400 per person and $3,600 Child Tax Credit (CTC) payment for Americans, part of the American Rescue Plan. Discover who qualifies and how you can benefit from this crucial financial support.
The Child Tax Credit (CTC) is a vital financial benefit designed to support eligible families with qualifying dependent children in the United States. Established in 1997, the CTC aims to alleviate the financial challenges faced by households raising children.
To qualify for the Child Tax Credit (CTC), households must meet several requirements:
Each child must have a valid Social Security Number.
The child must be under 17 years old before the tax year ends.
The child must have lived with the applicant for over half of the year.
The child must be an American citizen, national, or resident alien and must not have provided more than half of their own support.
Changes
Initially, the CTC was set at $2,000 per child, with $1,400 being refundable. However, significant changes have been made in recent years to enhance this benefit:
In 2021, the American Rescue Plan increased the CTC to $3,600 for children under six and $3,000 for children aged six to seventeen. The entire credit was made refundable for that year.
In 2022, these enhancements were rolled back to previous levels.
Looking ahead to the fiscal year 2024/25, adjustments to the CTC are expected to address inflation under the proposed Tax Relief for American Families and Workers Act of 2024. Key changes include:
A gradual increase in the maximum refundable amount, reaching $1,900 in 2024.
Stay tuned as more information becomes available about these significant updates. The enhanced CTC payments are set to provide substantial financial relief to American families, ensuring a brighter future for our children.
2024 Expectations
In 2021, due to the American Rescue Plan, the Child Tax Credit (CTC) saw a significant increase. Families received $3,600 for each dependent under six years old, and the entire amount was refundable, meaning households could get money back even if they didn’t owe taxes.
Looking ahead to 2024, the CTC is expected to increase slightly to align with the rising cost of living. According to reports, the maximum refundable amount for families will rise to $1,900 in 2024 and $2,000 in the following year. This adjustment aims to ensure households receive sufficient support to cover their expenses.
Here’s everything you need to know about the direct benefits the American Rescue Plan provides to working households:
Single individuals must earn less than $75,000.
Joint filers must have a combined income of up to $150,000.
Heads of households should not be making more than $112,500.
By meeting these income criteria, families can qualify for the stimulus checks, providing much-needed financial relief. Above these income thresholds, the payments phase out. The Senate sped up the bill’s phase-out as follows:
For single filers, the payment phases out completely at $80,000 (vs $100,000 in the House bill).
For heads of household, it phases out completely at $120,000 (vs $150,000).
For joint filers, it phases out completely at $160,000 (vs $200,000).
Direct Payments
Other key points about the direct payments include:
They provide an extra $1,400 per person. This brings the total payment to $2,000 per person when added to the $600 from December 2020.
Those who received the full $600 in December will receive the full $1,400 now.
College students and seniors claimed as dependents also get $1,400 each.
Are you a parent with children under the qualifying age? If so, you could receive up to $1,400 for each child if they qualify for the American Rescue Plan.
What to Expect
If you’re considering enrolling in the American Rescue Plan, here’s a breakdown of what you can expect:
Individuals without children can qualify for an income tax credit ranging from $543 to $1,502.
Parents with children can benefit from the Child Tax Credit (CTC), receiving between $2,000 to $3,000 for each child over the age of 6, and up to $3,600 for children under 6 years old.
Age Limit
Previously, the age limit for a child to qualify for the CTC was sixteen years. However, this has now been extended to seventeen years under the new rates.
Differences
The key differences between the original Child Tax Credit (CTC) and the enhanced CTC payments provided under the American Rescue Plan in 2021 are:
Increased Credit Amount: The American Rescue Plan increased the CTC from $2,000 per child to $3,600 for children under age 6 and $3,000 for children ages 6-17.
Full Refundability: The CTC was made fully refundable, meaning low-income families could get the full credit even if they owed no taxes. Previously, the refundable portion was limited to $1,400 per child.
Expanded Eligibility: The enhanced CTC included 17-year-olds for the first time. The original CTC only covered children under 17. It also removed the minimum income requirement.
Advance Payments: Families got monthly advance payments from July to December 2021, receiving half of their estimated CTC instead of waiting until filing taxes to get the full credit.
Higher Phase-Out Thresholds: The enhanced CTC began phasing out at higher income levels, at $112,500 for single parents and $150,000 for married couples, compared to $200,000 and $400,000 for the original CTC.
The CTC reduced child poverty to a record low of 5.2% in 2021, lifting millions of children out of poverty across all races and ethnicities.
FAQs
Who qualifies for the Child Tax Credit (CTC)?
Families with children under 17 years old, meeting income and residency criteria.
How much is the CTC payment for 2024?
The maximum refundable amount is $1,900, rising to $2,000 in 2025.
What are the income thresholds for the CTC?
$75,000 for single filers, $150,000 for joint filers, and $112,500 for heads of households.
Is the CTC fully refundable?
Yes, the CTC is fully refundable, allowing low-income families to receive the full credit.
How has the CTC changed in recent years?
The American Rescue Plan increased the CTC amount, expanded eligibility, and introduced monthly advance payments.
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