When is the New Child Tax Credit Effective

The child tax credit is the most popular tax credit for all taxpayers. If you have qualifying children under the age of 17 (for this tax year), you get to claim the child tax credit to reduce your tax liability. 

The child tax credit has been one of the most prominent tax credits over the years. With the changes aimed for the 2024 tax season (for your 2023 taxes), the child tax credit will be the most important tax credit for taxpayers across all income levels, filing status, and more. 

The new child tax credit, or enhanced child tax credit in other words, is going to be effective starting from the 2024 tax season. So, you’ll get to claim an increased child tax credit for the 2024 taxes. 

Child Tax Credit Increased Amounts

The child tax credit is currently $2,000 for all children under the age of 17. If your income exceeds the threshold, it will be reduced. The refundable portion of the child tax credit is $1,400, $600 less than the original credit amount.

This will change with the child tax credit in 2024 – not only the amount of the credit is increased. How much you get back for a child on taxes is now full. The increased amounts are $3,600 for children under the age of 6. You can get the full $3,600 back in your refund too. Taxpayers get $3,000 per child between the ages of 6 and 18. The maximum age limit is also increased with the new child tax credit that’s effective from the 2024 tax season and beyond. Before this change, taxpayers could claim the child tax credit for children under the age of 17.

Claiming the new child tax credit

Claim the new child tax credit as you would before the change. You’ll need to enter the number of dependents you have along with their personal information on Form 1040 and claim the child tax credit in the corresponding line. 

With two children under the age of 6, taxpayers can get a huge tax break as the total value is $7,200, and virtually get all of the income tax paid during the tax year back in their refunds.

Advanced child tax credit payments

There are also the advanced child tax credit payments that will start to roll out starting from July of this year. Between July and December 2024, taxpayers will get a monthly payment of $250 per child ages 6 – 18 while those with a child under the age of 6 get $300 per month. 

Since the advanced child tax credit payments are given out to every taxpayer that qualifies for it without looking at their adjusted gross income, taxpayers that get less than the full amount may have to pay back some of the advanced payments received. If that’s the case for you, there is a high chance that you’ll get a reduced child tax credit. This is a major consideration as to why you may want to opt out of the advanced child tax credit payments.