Tax season arrives, and many families wait with a mix of hope and uncertainty for that financial boost represented by a small refund. For many families, the Child Tax Credit (CTC) has become essential. However, a simple mistake on the form will prevent you from receiving that money, even if you meet all the requirements. Filing taxes is extremely complex for many people, especially if they’re not familiar with this credit. So, below, we’ll tell you everything you need to know and do to avoid being one of those families whose credit gets rejected due to filing errors.
What is the Child Tax Credit?
It’s a benefit granted to parents or guardians with underage children, aimed at reducing the family’s tax burden. It’s one of the best-known benefits in the U.S. tax system, and also one of the most claimed. If you qualify for this credit, you may also be eligible for the Additional Child Tax Credit, which allows you to receive part of the amount as a refund, even if you don’t owe taxes.
How much can you receive?
For the 2024/2025 tax year, the amount per child is $2,000, but up to $1,700 of that may be refundable.
But the most important thing is that this payment is not automatic, you must activate it yourself when filing your return. That’s why hundreds of families miss the opportunity to claim this money.
How do you apply?
Very simple: when filing your taxes this season, you’ll need to use Form 1040 (or 1040-SR if you’re over 65). At the time of filing, there is a specific section where you must include the details of your eligible children or dependents.
You’ll need the following information for each child:
- Their full name
- Their valid Social Security Number (SSN)
- Their relationship to you (child, grandchild, sibling, etc.)
- And confirmation that they lived with you for at least half of the current tax year.
The Child Tax Credit is intended for low or moderate-income families, so only those earning less than $200,000 (for single filers) or $400,000 (for joint filers) are eligible. If these limits are exceeded, the application will be rejected.
Where do people go wrong?
There are three most common mistakes when applying for this credit, and we’ll explain them so it doesn’t happen to you:
Not applying for the credit at all. Many people don’t even know whether they qualify for this payment, and others aren’t aware the credit exists. Some believe the IRS will apply it automatically, but no, it’s a credit you have to request.
Not verifying the information for eligible children. Make sure all the details are correct when filling out the form, because if you make a mistake, the IRS won’t even notify you that there was an error.
Earning more than $200,000 per year. If you earn above this limit, you will be automatically excluded from receiving the credit.
In case of doubts…
Consult a professional, especially if you’re self-employed or retired. Ask for help to file your taxes, they’ll guide you through requesting all the credits you’re entitled to.
Read carefully on the IRS website and use the available calculators.
Remember, the CTC is a right for taxpayers who meet the requirements. So don’t forget to apply for it and check that all your data is correct. And don’t forget: 16 states have their own CTC program, look into it so you can receive even more money!