Taking advantage of the child tax credit and other family tax credits and deductions can reduce your tax liability or increase your refund. However, the credits and deductions you are entitled to may change from year to year. And the amounts of credits and deductions can also change, as many are adjusted annually for inflation.
While you may already know about the 2023 child tax credit and other family tax relief for the current year, here’s what you can expect for the 2024 tax year (for income tax returns typically filed in early 2025).
How high is the child tax allowance in 2024?
The child tax credit in 2023 (current tax year) is up to $2,000 and $1,600 of that amount is refundable. This is the number you will use for your tax returns that you will file in early 2024.
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However, for tax year 2024 (tax returns you file in 2025), the refundable portion of the credit increases to $1,700. This means eligible taxpayers could receive an additional $100 per eligible child as a tax refund. (Note: Income limits apply.) And unless Congress makes legislative changes to the tax credit, the child tax credit will remain at up to $2,000 through 2024.
It should be noted that the IRS There are strict guidelines as to which dependents are considered eligible children. So keep in mind that for a child to be eligible for the child tax credit, all of the following requirements must be met:
- The child must be under 17 years old at the end of the year.
- The child must be your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these persons (for example, a grandchild). act.
- Children cannot provide more than half of their own financial support over the course of the year.
- Each child must have lived with you for more than half the year.
- You must list the child as a dependent on your tax return.
- Dependents may not file a joint tax return with their spouse for the tax year (or file only to claim a refund of income tax withheld or estimated tax paid).
- The child must have been a U.S. citizen, U.S. national, or U.S. resident alien during the taxable year.
It’s also important to note that the expanded federal child tax credit expired last year. However, since then, several states, including Minnesota and New Mexico, have enacted expanded child tax credits of their own. Qualification criteria vary from state to state, so you may be eligible for a federal child tax credit even if you are not eligible for a state child tax credit.
2024 Adoption Tax Credit
The federal adoption tax credit is currently (for the 2023 tax year) up to $15,950, but this amount is too also adjusted for inflation every year. However, income limits apply.
For 2024 (filing your tax return in 2025), if you incur expenses related to the adoption, you may receive a modified adjusted gross income (POINT) of up to $252,150 and still be eligible for the full credit. The amount of the credit decreases for taxpayers with a MAGI greater than $252,150 and is eliminated when the MAGI reaches $292,150.
For 2024, the adoption tax credit is equal to the amount of qualified adoption expenses, up to $16,810. The credit is non-refundable, so the amount cannot exceed your tax liability. However, you can apply the excess loan amount to future years (up to five).
2024 Earned Income Tax Credit (EITC)
Another tax credit that may be important for lower- and middle-income individuals and families is the Earned Income Tax Credit (EITC). This is a refundable tax credit. This means you could receive the amount of the credit as a tax refund if you qualify.
For 2024, the credit is up to $7,830 (up from $7,430 in 2023) with three eligible children, $6,960 (up from $6,604) with two eligible children, $4,213 (up from $3,995). -$) for a qualifying child and $632 (up from $600). ) without eligible children.
To claim the EITC, you must have earned income (e.g. from wages, business income, investments, etc.). In addition, your income cannot exceed the thresholds established for the 2024 tax year.
Here are the 2024 income phase-out amounts for claiming the EITC.
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|Registration status||Number of Children||Exit amount|
|Married filing jointly||None||$17,250|
|Married filing jointly||One or more||$29,640|
|All other registration statuses||None||$10,330|
|All other registration statuses||One or more||$22,720|
If your income exceeds the amounts listed above, you may be eligible for a reduced credit.
Below are the completed income phase-out amounts (that are not eligible to claim the credit) for claiming the EITC credit in 2024.
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|Registration status||Number of Children||Completed exit amount|
|Married filing jointly||None||$25,511|
|Married filing jointly||One||$56,004|
|Married filing jointly||Two||$62,688|
|Married filing jointly||Three or more||$66,819|
|All other registration statuses||None||$18,591|
|All other registration statuses||One||$49,084|
|All other registration statuses||Two||$55,768|
|All other registration statuses||Three or more||$59,899|
(All other filing statuses also apply to married taxpayers who do not file a joint tax return if they meet the special requirements Rules for separated spouses.)
Note: Typically, dependents must be under 19 years of age at the end of the year to be considered dependents for eligibility for the EITC. However, the IRS is considering Relatives with disabilities eligible children, regardless of their age.
Source : www.kiplinger.com