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Moms still waiting on this Mother’s Day for increased Child Tax Credit gift from Congress

Mother and son on couch hugging

Happy Mother’s Day! I hope all the moms out there got everything they wanted today.

Of course, we should be grateful for all that our parents do for us every day of the year. In additional to the emotional support, moms (and dads) literally pay for parenthood.

A recent calculation of the average cost to raise a child to age 18 came to $312,202. That figure is for a middle-class family, and doesn’t include college expenses. Yikes!

Isabel V. Sawhill, a senior fellow emeritus in economic studies at the Brookings Institution, told WTOP News that the true price could be even more. Things like the unexpectedly high inflation we experienced last year make a difference. So do the many family circumstances and choices that can increase or decrease the cost of child rearing.

Some parents, however, can get some help from the Internal Revenue Code. One of the most popular, and helpful, tax breaks is the Child Tax Credit.

On this Mother’s Day — which earns May 12, 2024, this week’s By the Numbers honor — here’s a look at the Child Tax Credit, or CTC, and recent efforts to expand this tax break.

Child Tax Credit history: This tax break has been around since 1997, where the then $400 per child tax credit was part of the Taxpayer Relief Act. Over the years, that relatively modest credit amount has increased with bipartisan support on Capitol Hill.

One thing hasn’t changed, though. The CTC is one of the better tax breaks because it is a tax credit.

As a credit, it provides a dollar-for-dollar reduction of any tax the eligible taxpaying parent owes. And part of the amount could be refundable, meaning the parent could get any amount left after paying due tax comes back as a tax refund.

But, as noted by the CTC’s relatively small original amount, the credit is fluid.

The CTC was expanded under the Tax Cuts and Jobs Act (TCJA), going in tax year 2018 from $1,000 to $2,000. Like most individual tax provisions in the GOP tax reform law, the larger CTC amount will expire at the end of 2025.

In 2021, during the COVID-19 pandemic, Congress increased the CTC amount — upping it to a maximum $3,600 for each qualifying child — and made more of the credit refundable. That law also required the Internal Revenue Service to issue the CTC in advance, so eligible parents didn’t have to wait unit they filed their taxes to get their eligible amount.

In 2022, the coronavirus-increased CTC ended. Payments returned to the TCJA $2,000 amount. Advocates of a larger CTC say that reversion erased the benefits of the larger credit amount, which had cut child poverty in half, the largest drop ever recorded.

That statistical CTC roller coaster prompted new efforts, that are continuing, to again expand the credit.

Latest CTC expansion efforts: The U.S. House of Representatives in early 2024 passed a $78 billion tax bill, the Tax Relief for American Families and Workers Act of 2024. It includes provisions that would make it easier for more families to qualify for the CTC.

The bill also would make it possible for families more children to get a larger credit.

That increase is due to a proposed change to the refundable portion of the credit, the amount you get back if you don’t owe tax. Under the bill, instead of a maximum $1,600 per child refundable amount, the maximum refundable amount per child would rise to $1,800 in 2023; $1,900 in 2024; and $2,000 (the full credit amount) in 2025.

But until the Senate joins the House in approving the latest tax relief bill, which President Joe Biden supports, parents now are left with the current CTC amounts. That’s $2,000 per child, with up to $1,600 of that refundable to eligible taxpayers.

To get the existing credit amounts, a taxpayer must meet certain conditions, including all of the three listed below.

  • The child being claimed was younger than 17 at the end of the tax year,  
  • The taxpayer claims the child as a dependent, and
  • The child lives with the taxpayer for at least six months of the year.

As far as income, for the 2023 tax year you qualify for the full CTC amount for each qualifying child if your annual earnings do not exceed $200,000 or $400,000 if you’re married and file a joint return.

Additional eligibility factors can be found at the Child Tax Credit web page. You’ll also find there a link to the IRS’ Interactive Child Tax Credit online assistant to help you determine if you qualify.

2023 CTC relief options: If the Senate does pass the tax bill with the CTC enhancements this year, the 2023 tax year changes would mean parents who have filed their 2023 tax returns could get the increased benefits.

They might have to file an amended return. Or it's possible that the IRS, as it did with the COVID CTC amounts, once again would take care of the added tax relief by automatically sending those filers the extra credit amounts.

And that would be a great belated Mother’s Day 2024 gift. 

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