Hi, Let’s talk about something that might not be as exciting as prom or the big game, but it’s super important: the Child Tax Credit for 2023-2024. Think of it as a mini-class on adulting and money.
What’s the Deal with the Child Tax Credit?
Basically, this is a chunk of money – up to $2,000 – that your parents or guardians might get for each kid they have under 17. And guess what? If they don’t owe a lot of taxes, they could get $1,600 of it back in cash. There’s also talk about bumping that up to $1,800 soon.
Who Spilled the Beans?
This info comes straight from the pros: Sabrina Parys and Tina Orem. They’re big on taxes and money stuff at NerdWallet. And it’s been double-checked by their editor, Arielle O’Shea, who knows loads about investing and retirement (which is a long way off for us, but still cool to know).
How Does This Whole Thing Work?
If your folks are making less than $400,000 a year (if they’re married) or $200,000 (if they’re not), they could get this credit. But if they earn more, they get a bit less credit.
What’s Coming Up?
There’s a new law possibly on the horizon called the Tax Relief for American Families and Workers Act of 2024. It might change how much money comes back to families in the future, so stay tuned!
Who Gets the Money?
Your parents or guardians can claim this credit if they’re looking after kids under 17. There are a few rules about who counts as a dependent, where they live, and how much money the family makes.
Getting the Cash Back: The ACTC
The Additional Child Tax Credit (ACTC) is the part of the credit that can come back as a refund. Your folks need to earn at least a certain amount or have three or more kids to get this.
Filing Time: How to Claim It
When your family does their taxes for 2023 (sometime in 2024), they’ll need to fill out some forms to get this credit. There’s software that can help make this easier.
When’s the Money Coming?
If your family files their taxes early and uses direct deposit, they could see the refund by late February 2024. If they file on paper, it might take a bit longer.
More Than Just Federal: State Credits Too
Some states have their own versions of this credit. Plus, there’s a $500 credit for other dependents who might not qualify for the full Child Tax Credit.
CTC vs. Child and Dependent Care Credit
The CTC helps with the costs of having kids. The Child and Dependent Care Credit is for expenses like daycare so parents can work.
A Little History Lesson
The Child Tax Credit started in 1997 and has changed a lot since. The most recent big changes were in 2017 and 2021.
Common Questions You Might Have
We cover how much the credit is worth, if it’s taxable (it’s not), and the differences between this credit and others.
From the Experts
Sabrina Parys and Tina Orem at NerdWallet break all this down so it’s easy to understand. They’re the go-to for tax and money info.
What Else?
There are other tax topics that might interest your family, like tax brackets and deductions. It’s all part of understanding how money works in the real world.
So there you have it, a quick rundown on the Child Tax Credit. Not as fun as your favorite TikTok dance, but hey, it’s money stuff that matters!