Tax season arrives, and many families wait with a mixture of hope and trepidation for the financial boost provided by a small refund. For many families, the Child Tax Credit (CTC) has become indispensable. A simple mistake on the form can prevent you from receiving the money, even if you meet all the requirements.
Filing taxes is extremely difficult for many people, especially if they are unfamiliar with this credit. So, below, we’ll explain everything you need to know and do to avoid becoming one of the families whose credit is denied due to filing errors.
What is the Child Tax Credit?
It’s a tax break given to parents or guardians of minor children to help them pay less in taxes. It is one of the most well-known and frequently claimed benefits in the United States’ tax system. If you qualify for this credit, you may also be eligible for the Additional Child Tax Credit, which allows you to receive a portion of the credit as a refund even if you do not owe taxes.
How much can you receive?
For the 2024/2025 tax year, the amount per child is $2,000, with up to $1,700 refundable.
But most importantly, this payment is not automatic; you must activate it when filing your return. That is why hundreds of families pass up the opportunity to receive this money.
How do you apply?
Simple: when filing your taxes this year, you’ll need to use Form 1040 (or 1040-SR if you’re over 65). There is a section on the filing form where you must include information about your eligible children or dependents.
You’ll need the following information for each child:
- Their full name
- Their valid Social Security Number (SSN)
- Their relationship to you (child, grandchild, sibling, etc.)
- And confirmation that they lived with you for at least half of the current tax year.
The Child Tax Credit is intended for low or moderate-income families, which means that only those earning less than $200,000 (for single filers) or $400,000 (for joint filers) are eligible. If these limitations are exceeded, the application will be rejected.
Where do people go wrong?
There are three most common mistakes when applying for this credit, and we’ll explain them so it doesn’t happen to you:
Not applying for credit at all. Many people have no idea if they qualify for this payment, and others are unaware that the credit exists. Some people believe the IRS will apply it automatically, but this is a credit that you must request.
Not verifying information for eligible children. When filling out the form, make sure all of the details are correct; if you make a mistake, the IRS will not even notify you of the error.
Earning more than $200,000 annually. If your earnings exceed this limit, you will be automatically excluded from receiving the credit.
In case of doubts…
Consult with a professional, particularly if you are self-employed or retired. Ask for assistance with filing your taxes, and they will walk you through the process of requesting all of the credits to which you are entitled.
Consult the IRS website and use the calculators.
Remember that the CTC is a right granted to taxpayers who meet the eligibility requirements. So, don’t forget to apply and double-check all of your information. Don’t forget that 16 states have their own CTC program; look into it to get even more money!
