Additional Child Tax Credit: Know Amount, Eligibility & Payment Dates

The Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC) are very important to many families in the US. These credits provide financial support to families with eligible children. While the CTC is a non-refundable credit that reduces tax liability, the ACTC allows eligible taxpayers to receive a portion of the unused credit as a refund. This can provide families with additional cash and reduce their tax burden.

Eligibility Criteria for CTC and ACTC

The following are the prerequisites to be met to receive the CTC and ACTC benefits:

• ✔ Child age: Must be under 17 years of age by the end of the tax year.
• ✔ Relationship: The child must be a child, stepchild, sibling, half-sibling, or descendant (such as a grandchild or nephew) of the taxpayer.
• ✔ Economic dependency: The child must not have borne more than half of his or her own expenses.
• ✔ Residence: The child must have lived with the taxpayer for at least half the year.
• ✔ Social Security number: The child must have a valid Social Security number (SSN) issued before the tax filing deadline.
• ✔ U.S. citizenship: The child must be a U.S. citizen, national, or resident alien.
• ✔ Dependent status: The child must be declared as a dependent on the taxpayer’s tax return.
• ✔ Joint tax return: The child cannot file a joint tax return unless it is filed only to receive a tax refund.

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How to claim ACTC?

Those who are eligible for the Additional Child Tax Credit (ACTC) must complete Form 1040 (U.S. Individual Income Tax Return) and attach Schedule 8812 to it to receive it.

If a taxpayer’s tax liability exceeds their unused child tax credit, the ACTC applies. This excess credit is received by the taxpayer as a cash refund, providing financial assistance to families.

ACTC Amount in 2024 and 2025

In 2024 and 2025, eligible families can receive up to a maximum of $1,700 for each eligible child. This amount provides significant relief for families who are facing financial difficulties.

However, according to IRS rules, if a refund includes the ACTC, it cannot be issued before mid-February. Therefore, taxpayers should be aware that refunds under the ACTC may be delayed.

Income Limits and Phase-Out Thresholds

Under the ACTC, $1,700 of the maximum $2,000 for each child is refundable. However, if a taxpayer’s adjusted gross income (AGI) exceeds the following limits, the amount of the credit gradually begins to decrease:

• ✔ Single Filers: The deduction begins at incomes above $200,000.
• ✔ Married Filing Jointly: The deduction begins at incomes above $400,000.

Also, taxpayers who file Form 2555 (the form used to exempt income earned abroad) are not eligible for the ACTC.

Key legal changes associated with the CTC and ACTC

• ✔ 1997: The Child Tax Credit (CTC) was first introduced under the Taxpayer Relief Act to reduce the tax burden of taxpayers.
• ✔ 2001: The Additional Child Tax Credit (ACTC) was added as a temporary provision under the Economic Growth and Tax Relief Reconciliation Act.
• ✔ 2017: The CTC was increased from $1,000 to $2,000 per child under the Tax Cuts and Jobs Act and the income criteria was also increased.
• ✔ Latest Change: Taxpayers in Puerto Rico can now qualify for the ACTC with just one child, up from three previously.

Key Requirements to Claim ACTC

Families who want to avail themselves of the ACTC must first qualify for the CTC and have unused credits after paying taxes. Additionally, the child must have lived with the taxpayer for at least half the year and must not have borne more than half of his or her own expenses. The child must have a Social Security Number (SSN), issued before the tax filing deadline.

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Conclusion

The Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC) are important financial aid for American families. The CTC reduces taxpayers’ tax liability, while the ACTC provides direct economic relief to families by turning unused credits into a cash refund.

In 2024 and 2025, eligible families can receive a refund of up to $1,700 for each eligible child, easing their financial burden. However, taxpayers should pay attention to their income limits and eligibility criteria to make full use of this benefit. If you are a parent and are eligible for CTC or ACTC, don’t forget to claim it on time by filling out the correct form so that you can get maximum benefits!

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