IRS to Issue $2,000 Refunds to Eligible Families in the Coming Months Families in the United States receive financial support through the Child Tax Credit (CTC), which has given some tax breaks to families raising children for a long time. Since then, qualified families have benefited with as much as $2,000 for each qualifying child to help mitigate the costs of raising children and decrease the tax burden. However, families should prepare for some changes to bills that may come in after 2025 upon expiration of the actual legislation, and make sure to report and claim credits in the meantime before the changes take effect.
This article will elucidate the eligibility requirements, some possible legislative changes, and how to claim your tax credit so you can receive the benefits you.
Taking Into Account the Child Tax Credit (CTC)
Namely built to reduce some of the federal income taxes owed by families with dependent children, the credit is a sore point of burden relief to scores of families to address issues like paying for education, healthcare, or child care.
Currently, families can receive up to $2,000 per qualifying child, partially refundable. But starting in 2026, if the credit is not extended via some legislation, the current $1,000 credit would lessen available and financial support for many households.
Who Should Qualify Before Claiming the Child Tax Credit?
An IRS Child Tax Credit would have to meet requirements:
- Relationship to the Child: The child, when being claimed, must be biological, adopted, stepchild, or another direct relative (grandchild, sibling under guardianship).
- Residency Requirement: The child must have lived with the taxpayer for at least six months for the tax year.
- Dependency Status: The child must be claimed as a dependent on the taxpayer’s federal tax return.
- Age Limit: The child must be below 17 years old at the end of that particular tax year.
Limits Of Income:
The Child Tax Credit, that means with certain income limits, begins to gradually phase out:
- $200,000 for single filers.
- $400,000 for married couples filing jointly.
This limit applies, as stated with TCJA of 2017. These income limits may be changed, post expiry of TCJA, thus reducing the number of families who would qualify for the full Child Tax Credit.
Proposed Changes to the Child Tax Credit
In the early sessions of 2024, the House passed the Child Tax Credit proposal for an increase to $1,900 per child with indexing to inflation on refundability; however, it failed to pass in the Senate, leaving the uncertainty of tomorrow for the CTC.
If Congress does nothing, the CTC benefits of families will significantly lessen by 2026. Follow-up on legislative changes, since it will help you make the most available credits for your family before another change occurs.
How to Claim the Child Tax Credit
Taxpayers must file a federal tax return to obtain Child Tax Credit benefits, attaching the appropriate forms. The requisite documents are:
- Form 1040: Standard U.S. Individual Income Tax Return required of any taxpayer claiming credits.
- Form 1040-SR: Used by taxpayers of 65 years or over.
- Schedule 8812: Used for claiming the Additional Child Tax Credit (ACTC), which in the case where the taxpayer’s child tax credit exceeds tax liability may be refundable for an amount up to $1,700.
Amended Tax Returns
If you missed claiming Child Tax Credit in certain previous years, you could still claim it, in that case, since the child remains eligible, simply by filing an amended tax return with IRS Form 1040-X. IRS allows for claiming Child Tax Credit for a maximum of three years from the due date for filing the original return.
The deadlines for claiming the Child Tax Credit retroactively are:
| Tax Year | Deadline to Claim CTC |
|---|---|
| 2023 | April 15, 2027 |
| 2022 | April 15, 2026 |
| 2021 | April 15, 2025 |
If you did not file a tax return that has the CTC, you still qualify for an amendment on your return and benefit from the credit given in the earlier periods.
Crisps
- The Child Tax Credit pays up to $2,000 for each child, but this potential is reduced over two years.
- The Child Tax Credit considers the relationship, residency, dependency, age, and income to limit the credit.
- Though the total proposal was made to the House for an increase in the refundable part of the CTC, this was not passed by the Senate; hence, the future of this bill remains uncertain.
- This means that a family would have to file Form 1040, Form 1040-SR, or Schedule 8812 regularly to claim entitlement to this tax credit.
- Did you miss filing for the previous CTC? You can still file an amended return using Form 1040-X to apply for retroactive credits.
Final Thoughts
The Child Tax Credit stands as the finest and most valuable wealth source for American families, helping them cope with this surge in living costs. Any legislative changes may come, so one should be kept posted and ever vigilant about using the benefits of tax claims before changes or amendments.
If you qualify for the $2,000 refund, be sure to file your tax return on time and keep an eye on potential policy updates to maximize your benefits in the coming years.