Thousands of families in the US can take advantage of the Child Tax Credit (CTC), which helps reduce the tax burden by up to $2,000 per child. This program has been an important financial aid for families with dependent children. However, the future of this scheme after 2025 is uncertain, as no firm decision has been taken yet regarding its extension.
What is the Child Tax Credit (CTC)?
The Child Tax Credit (CTC) is a federal tax benefit that eligible taxpayers get for their dependent children. With the help of this credit, taxpayers can reduce their total tax liability and, in some cases, can also get a partial refund.
Currently, this credit is available up to $2,000 per child, but if the current law is not extended after 2025, it may decrease to $1,000 and its eligibility limits may also change for certain income categories.
Eligibility conditions to get CTC
Some important conditions need to be met to claim this benefit:
- Age of the child: The child must be under 17 years of age.
- Relationship: The child must be a biological, step, foster or direct relative (sibling, grandchild, nephew or niece) of the taxpayer.
- Duration of stay: The child must have lived with the taxpayer for at least half of the tax year.
- Dependency: The taxpayer must list the child as a dependent on his tax return.
- Income limits:
- The full benefit is available to those with personal income up to $200,000.
- For those married filing jointly, the limit is $400,000.
- If the income is above this, the CTC amount starts phasing out.
Possible changes to CTC after 2025
Currently, this tax credit is available for up to $2,000 per child under the Tax Cuts and Jobs Act (TCJA) of 2017. But after 2025, it may drop to $1,000 and the benefit to higher income groups may also be limited.
In 2024, the House of Representatives passed a proposal to increase the CTC to $1,900 and adjust it for inflation, but the Senate rejected it. This means that there is uncertainty about the future of the CTC until 2026.
How to apply for CTC?
If you are eligible for this tax credit, you must claim it while filing tax returns with the IRS. The following forms are used for this:
- Form 1040—For filing individual income tax returns.
- Form 1040-SR – For seniors aged 65 years and above.
- Schedule 8812 – To claim the Additional Child Tax Credit (ACTC), which can provide a maximum refundable amount of up to $1,700.
How to claim CTC for previous years?
If you have not claimed this credit in previous years, you can get it by filing an amended return (Form 1040-X).
The application deadlines for CTC are as follows:
| Tax Year | Final Application Date |
|---|---|
| 2023 | April 15, 2027 |
| 2022 | April 15, 2026 |
| 2021 | April 15, 2025 |
If you have already filed a tax return but have not claimed the CTC, you can file an amended return through Form 1040-X by visiting the official website of the IRS.
The future of CTC and how to prepare
If Congress does not extend the CTC after 2025, millions of families will get less tax credit starting in 2026. Therefore, it is important that eligible taxpayers make full use of this benefit before 2025.
If you want more information about CTC, you can get the latest updates by visiting the official website of the IRS (www.irs.gov).
Conclusion
The child tax credit is an important financial aid for families who have dependent children. Currently, it provides a tax credit of up to $2,000 per child, but this may decrease after 2025. So, if you are eligible, file tax returns on time and take full advantage of this benefit.
FAQs
Q. What is the Child Tax Credit (CTC)?
A. The CTC is a tax benefit that reduces the tax burden by up to $2,000 per child for eligible families.
Q. Who qualifies for the Child Tax Credit?
A. Parents or guardians with children under 17 who meet IRS requirements, including residency and income limits.
Q. How do I claim the Child Tax Credit?
A. You can claim it by filing your tax return using Form 1040 and attaching Schedule 8812 if applicable.
Q. When is the deadline to claim the CTC for past years?
A. April 15, 2027, for 2023; April 15, 2026, for 2022; and April 15, 2025, for 2021.
Q. Will the CTC amount change in the future?
A. If no new legislation is passed, the credit may reduce to $1,000 per child after 2025.