$300/Month Child Tax Credit is Back: When It’s Coming? Who Qualifies and How to Get it? Updated 2024

Key Takeaways

• The child tax credit is a tax benefit that helps families with children reduce their tax liability and boost their income
• The CTC was expanded in 2021 under the American Rescue Plan Act, providing monthly payments of up to $300 per child
• A new bipartisan proposal aims to extend and enhance

The child tax credit (CTC) is a federal tax benefit that helps families with children reduce their tax liability and boost their income. In 2021, the CTC was expanded under the American Rescue Plan Act, providing millions of families with monthly payments of up to $300 per child. However, this expansion was only temporary and is set to expire at the end of 2021.

Fortunately, there is a new bipartisan proposal that aims to extend and enhance the CTC for the next few years. If passed, this bill could provide families with up to $300 per month per child in 2024 and beyond, as well as a $2,000 bonus for new babies. In this article, we will explain what the CTC is, how it works, and what the new proposal entails. We will also answer some common questions about the CTC, such as:

• What is the child tax credit and how much is it worth?
• When is the $300/month tax credit coming and how long will it last?
• Who qualifies for the $300/month tax credit and how do they get it?
• What are the benefits and challenges of the CTC expansion?

What is the Child Tax Credit and How Much is it Worth?

The CTC is a tax credit that reduces the amount of income tax that parents owe based on the number and age of their children. A tax credit is different from a tax deduction, which reduces the amount of income that is subject to tax. A tax credit directly lowers the amount of tax that is owed, and in some cases, it can result in a refund if the credit exceeds the tax liability.

For the 2024 tax year (the tax return filed in 2025), the CTC will be worth $2,000 per qualifying child, with $1,700 being potentially refundable through the additional child tax credit (ACTC). A refundable tax credit means that you can get that amount if it exceeds the amount of tax that you owe. The CTC and the ACTC are subject to income limits and phase-outs, which we will discuss later.

To qualify for the CTC, you must have a child who meets the following criteria:

• Is under age 17 at the end of the tax year
• Is your son, daughter, stepchild, foster child, sibling, stepsibling, half-sibling, or a descendant of any of these (for example, a grandchild, niece, or nephew)
• Lives with you for more than half of the year
• Does not provide more than half of their own support
• Is claimed as a dependent on your tax return
• Does not file a joint return with their spouse for the tax year (or files it only to claim a refund of withheld income tax or estimated tax paid)
• Has a Social Security number that is valid for employment in the United States

You can use the IRS Interactive Tax Assistant to check if your child qualifies for the CTC.

When is the $300/Month Tax Credit Coming and How Long Will it Last?

In 2021, the CTC was temporarily increased and made fully refundable under the American Rescue Plan Act, which was signed into law by President Biden in March. The 2021 CTC provides up to $3,000 per child for children aged 6 to 17, and up to $3,600 per child for children under 6. The CTC is also paid in advance through monthly payments of up to $300 per child from July to December 2021, instead of being claimed as a lump sum when filing taxes in 2022. The IRS has already started sending out these payments to eligible families who have filed their 2019 or 2020 tax returns or signed up through the non-filer portal.

However, the 2021 CTC expansion is only for one year, unless Congress decides to extend it or make it permanent. President Biden has proposed to extend the CTC expansion until 2025 as part of his Build Back Better agenda, but it faces opposition from some Republicans and moderate Democrats who are concerned about the cost and the impact on work incentives.

In the meantime, a bipartisan group of lawmakers has introduced a new bill that would extend and enhance the CTC for the next few years. The bill, called the Family Tax Credit Act, was announced on January 17, 2024 by Senator Ron Wyden (D-OR) and Representative Jason Smith (R-MO). The bill would:

• Increase the refundable portion of the CTC from $1,700 to $1,800 in 2023, $1,900 in 2024, and $2,000 in 2025
• Adjust the CTC for inflation starting in 2024
• Ensure that the CTC phase-in applies fairly to families with multiple children
• Provide a $2,000 bonus for new babies, paid in the month of birth
• Restore the full, immediate deductions for business investments, research and development, and interest expenses
• Expand the low-income housing tax credit and extend tax breaks for disaster victims

The bill is estimated to cost $78 billion over 10 years and would be paid for by closing tax loopholes and increasing compliance. The bill has 210 co-sponsors in the House and 40 co-sponsors in the Senate, including some Republicans. However, the bill still faces uncertainty in Congress, as it would need to overcome a filibuster in the Senate and win the support of the House leadership.

If the bill passes, the $300/month tax credit would start in July 2024 and continue until December 2025, unless extended further. Families who are eligible for the CTC would receive the payments automatically, unless they opt out or update their information through the IRS portal. The payments would be made through direct deposit, paper check, or debit card.

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Who Qualifies for the $300/Month Tax Credit and How Do They Get it?

The $300/month tax credit would be available to families who meet the income and child eligibility criteria for the CTC, as explained above. The full credit would be available to individuals who have children and an adjusted gross income (AGI) of less than $75,000, or married couples who file jointly and have an AGI of less than $150,000. The credit would phase out by $50 for every $1,000 of income above these thresholds, until it reaches the pre-expansion level of $2,000 per child.

For example, a single parent with one child under 6 and an AGI of $65,000 would receive the full credit of $3,600 in 2024, or $300 per month. A married couple with two children aged 8 and 10 and an AGI of $160,000 would receive a reduced credit of $4,400 in 2024, or $183 per month. A single parent with three children aged 12, 14, and 16 and an AGI of $95,000 would receive no credit in 2024, as their income exceeds the phase-out limit.

To get the $300/month tax credit, families would need to file their 2023 tax return by April 15, 2024, or request an extension. The IRS would use the information from the tax return to determine the eligibility and amount of the credit, and send out the payments from July to December 2024. Families who do not file a tax return or have very low income would need to sign up through the IRS non-filer portal to claim the credit. Families who have a new baby in 2024 would also need to update their information through the IRS portal to receive the $2,000 bonus.

What are the Benefits and Challenges of the CTC Expansion?

The CTC expansion has been widely praised by advocates and experts as a powerful tool to reduce child poverty, boost family income, and support economic recovery. According to the Center on Budget and Policy Priorities, the CTC expansion in 2021 lifted 4.3 million children out of poverty and reduced child poverty by 40%. The CTC expansion also helped families afford basic needs, such as food, housing, health care, and education, as well as invest in their children’s future, such as saving for college or starting a business.

The CTC expansion also has some challenges and limitations, such as:

• The complexity and uncertainty of the tax system, which may make it difficult for some families to access the credit or plan their budgets
• The potential for errors and fraud, which may result in overpayments or underpayments of the credit
• The impact on work incentives, which may discourage some parents from working or earning more income
• The cost and sustainability of the program, which may add to the federal deficit and debt, and require trade-offs with other spending priorities

The CTC expansion is a major policy change that affects millions of families and children in the United States. Whether it will continue beyond 2021 depends on the political and economic environment, as well as the public opinion and feedback. As the debate and discussion continue, it is important for families to stay informed and take advantage of the benefits that are available to them.

Source: (1) How much the child tax credit could increase in 2024 and what it means …. https://www.washingtonpost.com/business/2024/01/15/child-tax-credit-increase-2024/. (5) Child Tax Credit 2023-2024: Requirements, How to Claim – NerdWallet. https://www.nerdwallet.com/article/taxes/qualify-child-child-care-tax-credit. (2) $300 Stimulus Payment Every Month? Some Americans Qualify for This …. https://nationalinterest.org/blog/reboot/300-stimulus-payment-every-month-some-americans-qualify-185231. (3) American Rescue Plan | The White House. https://www.whitehouse.gov/american-rescue-plan/.