Taking care of our children is not always an amazing and rewarding task, especially when we talk in economic terms. Having, raising, and caring for a child is expensive. We’re not discovering Rome by saying this, and for many families, it’s a reality that every dollar counts.
That’s why the Child Tax Credit (CTC) was proposed, allowing taxpayers to claim a certain amount of money per qualifying child to help ease some of the financial burden, especially now that the economy is a bit shaky and many families can’t make ends meet with their salary.
But what’s interesting is that not all families apply for this credit because they don’t even know they’re eligible! So stick around to find out what this credit actually is and whether you can receive it too, you’re still on time, hurry up!
What is the CTC?
We’re talking about a tax benefit provided by the government. This credit is designed to help families with children reduce their tax burden. In 2021, the American Rescue Plan increased this credit, so thanks to this plan, families that qualify can receive up to $3,600 per child under six years old and $3,000 per child up to 17 years old.
The main goal of this credit is to reduce child poverty by providing direct financial support to families so they can cover 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?
Promoted by the U.S. Department of the Treasury, the rescue plan aims to reduce child poverty by increasing household income. In the United States, the most recent data on child poverty (2023) shows that one in four children lives in poverty (which we can translate to roughly 25% of the country’s children living in precarious conditions).
How can I apply for the CTC?
Applying for the CTC is very simple. According to the IRS, you can file an amended return (Form 1040-X) to get the credit if you forgot to apply for it. But if you’re filing your return this year for the first time, you’ll need to apply under the section labelled “Child Tax Credit.” In the first case, don’t forget to include Schedule 8812 when filing your return to claim the benefit. It’s important to keep in mind that you must do this before April 15 of this year!
Our advice
Make sure you meet all the requirements before applying for the CTC, and remember that the deadline to apply is the same as the tax filing deadline (April 15). If you have any doubts, it’s important to contact an expert who can guide you and make sure you’re doing everything right. Take advantage of this incredible opportunity to get a little extra money to invest in your children!
