The IRS is sending $2,000 refunds to eligible families over the next few months The Child Tax Credit (CTC) will benefit the thousands of families across the United States. This tax relief program allows a credit of as much as $2,000 per child. In households having dependent children, this particular credit acts as a very strong financial lifeline by reducing their tax burden hugely. However, with the law, which in its current form extends this benefit, about to expire in 2025, the reality is that millions of families will face a much decreased credit in 2026.
Now that the deadline looms nearer for congressional decisions, many are starting to wonder how CTC functions, what changes are afoot, and how to get this much-needed financial relief before any changes become law in tax legislation.
How the Child Tax Credit Works
This Child Tax Credit allows consumers to lower their tax bill for each qualifying child under age 17 up to $2,000. To qualify for the credit, a child must meet all of the conditions set forth by the Internal Revenue Service (IRS), which include:
- A biological child, stepchild, or direct relative of a taxpayer must be over 18.
- The child should stay with the taxpayer for a minimum of half the year.
- Dependent taxpayer claims a return.
Also, an amount of the credit is gradually phasing out for households with higher incomes. For example, if a taxpayer will gross more than $200,000 per year or more than $400,000 on joint returns, that is the point at which the credit begins to fall- and these figures have been decreased from those levels set in the TCGA for 2017, which are temporary altered expansions to the credit; all this changed in 2025 as well, dropping the credit to a much-reduced $1,000 per child and lowering the income limits for phase-out.
Potential Changes for the Near Future
Meanwhile, the Child Tax Credit remains wrapped in uncertainty, as it approaches 2025. Meanwhile, in 2024, the House had passed a bill to increase the maximum refundable part of the CTC up to $1,900, indexed for inflation. However, the Senate rejected such a proposal, keeping the future of this program uncertain.
Unless Congress takes the effort for the law to be extended or modified, there should be a reduction effect beginning in 2026. This translates to that parents would only be able to claim $1,000 per child instead of the current amount of $2,000 while also reducing the number of families who would qualify for the higher income thresholds.
This has many taxpayers a little on edge about whether they should take action now before any changes, if any are, put in place for their benefit. The best way to ensure you receive the full benefit is to file your tax return on time and ensure that you claim the Child Tax Credit, especially if your family is eligible.
How to Claim the Child Tax Credit
Claiming the Child Tax Credit is fairly straightforward, but you’ll have to file the right forms with the IRS to ensure that you get the credit. There are alternative tax return options for different situations:
- Form 1040: This is the standard Personal Income Tax Return form.
- Form 1040-SR: This one is specific for taxpayers of age 65 years and older.
- Schedule 8812: This additional form is required if you want to claim the Additional Child Tax Credit (ACTC), refundable if the amount exceeds your tax liability (up to $1,700).
And for individuals who haven’t claimed the Child Tax Credit for previous years they were eligible, just so you know, there is still time to correct such cases. You’d have to file an amended tax return using Form 1040-X, as below:
- For the claims for 2023, you can claim the credit up until April 15, 2027.
- For 2022 it is until April 15, 2026.
- For the year of 2021 up to April 15, 2025.
If you’ve submitted your tax return but then realize that you forgot to claim the credit, you can still fix it by submitting the right form, ensuring you receive the relief to which you’re entitled.
Why It’s Important to Act Now
With so many questions regarding the future of the Child Tax Credit, it makes sense to act now rather than wait. Time will be saved and funds will be maximized by filing on time and claiming the credits properly.
Instead, millions of families could see a considerable downward adjustment in the amount they can claim due to the expiration of this legislation. By getting your return done early and being aware of potential changes that could come around, you will be in the best position to maximize benefits that are available to you.
Conclusion
This Child Tax Credit has largely helped many families with children lessen their tax burden. The maximum given under this credit is about $2,000 for every qualifying child under this program. However, with the winds of change possible with respect to the law after 2025, families should act quickly to ensure they claim the full amount available to them. Keep following those tax-filing deadlines, filing the appropriate forms, and keeping an ear peeled for the possible changes to tax legislation that would affect the Child Tax Credit. If you haven’t claimed the credit for previous years, now is the right time to do so, ensuring that you fully reap this financial relief before changes take place.