Tax season is almost around the corner and it is a time of year that can cause a lot of stress for many families who do not have a large economic base. But not everything is bad when we have to file taxes, many times opportunities appear that help us alleviate that financial burden that we carry. We are talking, for example, about the Child Tax Credit, which is an opportunity that can make a big difference in the Family Budgets of many families. This payment is designed for those people who need it most so that they can cover food, education and housing expenses if they have children under 17 years of age. As you must understand how this credit works and how you can make the most of it, stay with us as we are going to explain how it works and how to apply for it.
What is the Child Tax Credit (CTC)?
Well, this is an essential tool for many American families. It is designed so that families with high tax burdens, who have children under 17 years of age who are still dependent (this means that they have never worked or filed their tax return) can receive direct financial support in paying their taxes. In 2025, the rules of this credit will continue to benefit many households that are eligible for it.
How does the CTC work?
Well, this payment is not just any payment, but the money you get from the Internal Revenue Service will be directly deducted from the amount of taxes you have to pay to the administration. That is, the corresponding amount will be deducted from the taxes you have to pay. You have to be aware that if you request the refund in 2025, it will be applied to the 2026 income tax return. This payment has a maximum limit of $2,000 and a maximum refundable portion of $1,700.
Another thing to keep in mind is that the CTC begins to phase out once a taxpayer’s adjusted gross income (AGI) exceeds the threshold. For every dollar over the threshold, the credit is reduced proportionally. This ensures that lower-income families receive the maximum possible benefit.
What are the requirements to qualify for the CTC in 2025?
One of the main requirements to qualify for this program is the income limit:
- For married taxpayers who file a joint return, the maximum limit will be $400,000.
- For those people or heads of household who file individually, it will be $200,000.
As we have said before, the amount of the child credit is $2,000 of which only $1,700 can be refunded. What does this mean? If your tax bill is less than this amount, you will be able to receive the difference as a refund in your account.
- Another essential requirement is to have a child under 17 years of age (at the end of the fiscal year), and who is related to you in some way, it can be a biological child, adopted child, brother, stepbrother or descendants of any of them.
- The child must have lived with you for more than half of the year in the tax year, meaning he or she must have been living where you have been living, and have provided more than half of the child’s support (this means that if you are delinquent in paying child support, you will not be eligible for this payment).
- Other requirements are that the child be a U.S. citizen or resident alien, and have a valid social security number issued before the tax return due date.
- Finally, the child cannot have filed a tax return on his or her own (unless it is to claim a refund of taxes withheld).
how to apply for the Child Tax Credit?
If you are already wondering how to apply for this credit, it is a very simple process as simple as filling out your information with the federal tax return, you will have to use the child tax credit worksheet that accompanies Form 1040 or 1040-SR, make sure to include all the documents they ask for so that your refund request is not delayed. Remember that this benefit will be directly deducted from the taxes you have to pay to the Administration.
So do not hesitate, since you have all the information regarding this credit, to request this benefit that can provide a little more relief to your family! And remember that we are all responsible for paying taxes.