What is the child tax credit?
Millions of people benefit from provision
Creditcards.com industry analyst Ted Rossman breaks down ways Americans can boost their credit scores regardless of their income.
There are a number of tax credits available to help American households, including one for qualifying dependent children, known as the Child Tax Credit.
People may be eligible for a $2,000 tax credit if they have qualifying children under the age of 17 (children must be 17 at the end of the calendar year), which is reduced from federal income taxes owed.
The credit is reduced by 5 percent in households with income over $200,000 ($400,000 for joint filers).
THE IRS SAYS CORONAVIRUS ECONOMIC IMPACT PAYMENTS CAN BE SEIZED FOR THIS REASON
Up to $1,400 can be refundable for each qualifying child, which means it can be given as a refund. The earned income threshold for the refundable credit is $2,500.
The child must live with the taxpayer for at least six months out of the year and have a valid Social Security Number.
Dependents who can’t be claimed for the child tax credit may still qualify the taxpayer for the credit for other dependents – valued up to $500 per person.
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The CTC, in its current form, went into effect in 2018 as part of the Tax Cuts and Jobs Act. The provisions as stipulated by the 2017 tax reform law as scheduled to expire in 2025, when the provision will revert to its pre-TCJA form where it was valued at up to $1,000 for qualifying children.
A version of the CTC was first introduced in the late 1990s.
More than 13 million people benefit from the provision.
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