In 2022, nearly half of the American population voiced their concern about paying too much taxes. Doing taxes can feel like burning a hole through your wallet, but they are crucial. Paying federal taxes helps support the nation’s infrastructure, including public services like defense, highways, and the justice system while funding programs providing welfare, health, and social services.
As tax preparers and child tax credit professionals in Atlanta and Milwaukee, we might not have a say regarding the nation’s tax system, but we can offer the means to ease tax payments. For all parents and legal guardians out there, there is some good news related to easing taxes. What? You may ask. For each child dependent on you, you can earn a tax benefit called a child tax credit.
If you want to learn more about child tax credit, then you’re at the right place. The following blog offers a valuable guide on child tax credit, from exploring its concepts to how to apply for it in 2024. Let’s examine each aspect, so you know the benefits your child can bring to your financial situation.
What is Child Tax Credit?
The child tax credit is a federal tax break offered to families needing financial assistance and having children to care for. The tax credit reduces your tax liability, making it easier to pay your taxes for the past year.
The child tax credit was first enacted in 1997 and has become a permanent part of the tax policy. The purpose of the tax credit was to help families in financial distress and provide ease. However, anyone who qualifies can apply for one. According to a 2022 report, child tax credit kept 3.7 million children from poverty in 2021.
What is the Child Tax Credit for 2024?
In 2024, when filing your taxes for 2023, it’s important to know the amount the tax credit offers. Every year, changes occur in tax amounts. Being aware of these changes and the benefits you can expect from the child tax credit is crucial.
This year, you can expect a child tax credit of around $3000 per child. However, the amount you can claim depends on the earned income and modified adjusted gross income. Consider consulting with a professional like ATC Income Tax. Our child tax credit professionals in Atlanta and Milwaukee can help provide a detailed amount breakdown for your expected child tax credit.
Financial Benefits of Child Tax Credits
If you’re still not convinced about applying for a child tax credit, consider going through these financial benefits to make an informed decision:
1. Increases Tax Refunds
One of the biggest benefits child tax credit offers is significantly boosting your tax refunds. Depending on your finances, if you have overpaid your taxes in the previous year, you can get that overpaid amount while filing your taxes. This is done by applying for a tax refund. However, if you also apply for child tax credit, you can get an even bigger tax refund.
For example, if you are expected to receive around $1500 as a tax refund and are the parent or guardian of three children, you can receive up to $10,500 as tax refunds, minimizing financial burdens.
2. Lower Tax Amount
Apart from boosting refunds, the child tax credit also actively reduces the amount of taxes you owe. This means that families that qualify can decrease their overall financial burden. The lowered tax amount translates to immediate income savings. It primarily can support households with eligible children.
3. Dependent Care Costs Mitigation
Although having children to call your own is a blessing, a significant cost is associated with their care and upbringing. Child tax credits can act as financial aid to these households by offering funds that they can put towards childcare, education, and other necessities.
4. Supports Low and Middle-Income Families
Child tax credits were specially made to assist low- and middle-income families. The government aimed to alleviate households with dependent children by offering financial assistance in the form of tax credits. If your income does fall in the low or middle bracket, applying for a child tax credit is the way to go.
Who Qualifies for a Child Tax Credit
Child tax credit has benefits, but there are some qualifications you need to meet to become eligible for a tax credit. When applying for a child tax credit through ATC Income Tax or other child tax credit professionals in Atlanta and Milwaukee, here are the requirements:
1. Child Age Under 17
The child must be under the age of 17 at the end of the tax year (31st December). A child above the age group or who turns 18 on the end date of the tax year will not be eligible.
2. Child Social Security Number
The child must also possess a valid social security number to qualify for child tax credit. This ensures accurate identification and proper documentation for tax purposes.
3. Guardian of the Child
A person claiming the tax credit must also prove to be the child’s legal guardian. Even if the person offers foster care or has adopted the child last tax year, they can still apply for the child tax credit. However, they must prove their legal guardianship.
4. Pass the Seven Tests
Apart from all the requirements, the IRS has proposed seven tests to assess if you qualify for child tax credit. The tax preparer will also evaluate you and your child on the basis of these seven tests, which include:
- Age Test
- Relationship Test
- Dependent Status
- Residency
- Financial Support
- Citizenship
- Income
5. Consult with a Tax Preparer
If you find the qualification requirements for tax credits complex, it’s always a good idea to consult with your local tax preparer. If you reside in Milwaukee or Atlanta, consider consulting ATC Income Tax, your child tax credit professionals in Atlanta and Milwaukee.
How Does the Child Tax Credit Work and How Do You Calculate It?
Millions of families apply for this valuable tax credit. The tax credit can either reduce the tax amount you owe to the IRS or be obtained as an additional fund with the tax refund. Think of the child tax credit as extra savings from the government for caring for the child.
However, what is the amount to expect from the child tax credit? Although it is up to $3,000 per qualifying child, how can you calculate the amount you receive as a child tax credit?
The best way to calculate the amount is using schedule 8812 as a worksheet. However, be advised that the publication can have complex jargon, so partner up with a professional tax preparer to estimate your tax credit.
How Do You Claim the Child Tax Credit?
Apart from understanding the child tax credit, let’s consider its application process. Here is a breakdown of how you can apply for a child tax credit via tax preparers in Atlanta and Milwaukee:
Submit Form 1040
Taxpayers must complete and submit Form 1040, the individual income tax return form, to claim the child tax credit. Ensure any information requested regarding your children is accurately provided. This includes each child’s social security number and spelling.
Provide Critical Information to Tax Preparers
If you applied for a child tax credit through a tax preparer service, you will need to provide some critical information regarding yourself and the kid. The tax preparer will request you to answer the seven tests to ensure you and the child meet the requirements. Once done, you will receive a child tax credit in a few days.
Final Note – Child Tax Credit Professionals in Atlanta & Milwaukee
In conclusion, the child tax credit is a valuable resource for middle-income earning families, as it offers substantial benefits through increased tax refunds and reduced tax liabilities. To leverage these advantages, it is crucial to understand the eligibility criteria and stay informed about current regulations.
If you’re a local in Milwaukee and Atlanta caring for a child, consider ATC Income Tax. We are child tax credit professionals in Atlanta and Milwaukee who can also guide you with child tax credits while helping you file your tax returns. Don’t miss out on the opportunity to avail tax credit.
FAQs – Tax Refund Loan Online
Is There Any Advanced Child Tax Credit in 2024?
No, there is no advanced child tax credit. It was only available during the Covid period, after which it was discarded.
How Do I Receive the 2023 Child Tax Credit?
You can receive the 2023 child credit with your 2023 federal tax refunds. There is no separate check offered for a child tax credit. So, consult with a professional tax return service provider.
Are Tax Refund Loans expensive?
Some Tax Refund Loans, especially more minor advances, may come with a 0% APR, making them a cost-effective option. However, larger loans might have associated fees or interest, so reviewing the terms carefully is essential.
Who Claims the Child if the Parents are Divorced?
In the case of divorce, the child tax credit is offered to the individual who has custody of the child.
What is the State 529 Plan?
The State 529 plan is another tax-advanced saving plan designed to encourage future saving. State 529, also referred to as “qualified tuition plans,” are state agency-sponsored plans that individuals can apply for their kids.
