Congress has introduced legislation to enhance the Child Tax Credit (CTC), aiming to offer more financial support to low-income families.
Currently, families can receive a credit of up to $2,000 per child, with a refundable maximum of $1,600. However, if approved by the Senate, this amount would increase.
Proposed Increase in Child Tax Credit Explained
The bipartisan bill passed the House of Representatives at the end of January, leaving only Senate approval pending to finalize the increase in the Child Tax Credit (CTC).
If sanctioned, families could receive higher payments over the next three years.
According to the proposal, the maximum refundable amount per child would gradually rise from 2023 to 2025, reaching $2,000.
For the fiscal year 2023, the maximum refundable amount per child would remain at $1,800. It would then increase to $1,900 in 2024 and finally reach the cap of $2,000 in 2025.
Additionally, in 2024 and 2025, this amount would be adjusted based on inflation indices.
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Child Tax Credit Eligibility Criteria
The eligibility criteria for the enhanced edition of the Child Tax Credit would closely resemble the existing requirements:
- The qualifying child must have been below 17 years of age as of December 31, 2023.
- The qualifying child must possess a valid Social Security number.
- The qualifying child must be a citizen of the United States or a resident alien.
- The qualifying child must not have provided over half of their own financial support.
- The qualifying child must have resided with the taxpayer for more than half of the year.
At present, individuals can determine the Child Tax Credit (CTC) by multiplying their earned income (exceeding $2,500) by 15%.
Under the proposed legislation, this calculation method remains the same: earned income (exceeding $2,500) multiplied by 15%, then further multiplied by the number of eligible children. Experts recommend using the Washington Post’s calculator for the most precise results.
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