Taking care of our children is not always an exciting and rewarding endeavor, especially in economic terms. Having, raising, and caring for a child is costly. We are not discovering Rome by saying this, and many families understand that every dollar counts.
That is why the Child Tax Credit (CTC) was proposed, allowing taxpayers to claim a set amount of money per qualifying child to help alleviate some of the financial burden, especially now that the economy is shaky and many families are struggling to make ends meet on their salary.
But what’s interesting is that not all families apply for this credit because they don’t realize they qualify! So stick around to find out what this credit is and whether you can get it too; you’re still on time, so hurry up!
What is the CTC?
We are discussing a government-provided tax benefit. This credit is intended to help families with children reduce their tax burden.
The American Rescue Plan increased this credit in 2021, allowing qualified families to receive up to $3,600 per child under the age of six and $3,000 per child up to the age of seventeen.
The primary goal of this credit is to reduce child poverty by providing direct financial assistance to families, allowing them to meet basic needs and improve the quality of life for children in this country.
Who is eligible?
This payment, which comes from the Internal Revenue Service (IRS), has the following requirements:
- The child must be under 18 at the end of the year
- Must have a valid Social Security number
- The taxpayer must be a direct family member or legal guardian of the child
- The child must have lived with the applicant for more than half of the previous year (within U.S. territory, obviously)
- The child must not have earned income
- Taxpayers must meet an annual income limit ($200,000 for single filers and double for joint filers); if they exceed this amount, the credit is reduced by $50 for every $1,000 of additional income
- Taxpayers must have provided at least half of the child’s support during the past year
- The child must be a U.S. citizen
What is the American Rescue Plan?
The rescue plan, promoted by the US Department of the Treasury, seeks to reduce child poverty by raising household incomes. In the United States, according to the most recent child poverty data (2023), one in every four children lives in poverty.
How can I apply for the CTC?
Applying for the CTC is extremely simple. According to the IRS, if you forgot to apply for the credit, you can file an amended return (Form 1040-X). However, if you are filing your first return this year, you must apply under the “Child Tax Credit” section.
In the first case, be sure to include Schedule 8812 when filing your return to claim the benefit. Keep in mind that you must complete this by April 15 of this year!
Our advice
Before applying for the CTC, make sure you meet all of the requirements, and keep in mind that the application deadline coincides with the tax filing deadline (April 15). If you have any doubts, contact an expert who can guide you and ensure you’re doing everything correctly. Take advantage of this incredible opportunity to earn some extra money to invest in your children!
