What is the Child Tax Credit?
The Child Tax Credit (CTC) is a federal tax benefit designed to provide financial assistance to families with dependent children. Initially introduced in 1997, the credit has undergone several adjustments, especially in response to economic challenges.
Key Features
- Eligibility: Families with children under the age of 17 may qualify for the CTC, depending on their income level.
- Credit Amount: For the 2023 tax year, the maximum credit is up to $2,000 per qualifying child. A portion of the credit can be refundable, allowing families to receive a refund even if they owe no tax.
- Refundability: The refundable portion, known as the Additional Child Tax Credit (ACTC), is subject to income limitations, enabling low-income families to benefit from the credit.
Recent Changes
Recent legislative changes have expanded the CTC, especially during the COVID-19 pandemic, increasing the benefit and allowing for monthly advance payments. These changes aim to reduce child poverty and support working families.
How to Claim
Taxpayers can claim the Child Tax Credit by filing their federal tax returns using Form 1040, ensuring to include relevant information regarding their dependents.
For more detailed eligibility requirements and benefits, families should consult the IRS website or a tax professional.