Full News: Everything You Need to Know About Child Tax Credit in USA ($2,550 Per Child)

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Key Takeaways

The Child Tax Credit (CTC) is a federal tax benefit that provides up to $2,000 per child under 17 for eligible taxpayers.
The CTC is nonrefundable, but some taxpayers may qualify for a partial refund of up to $1,600 through the Additional Child Tax Credit (ACTC).
Some states also offer tax refunds or credits for families with children, such as California, Colorado, Idaho, Maine, Maryland, Massachusetts, New Jersey, New York, Oklahoma and Vermont.
To claim the CTC and the ACTC, taxpayers need to file a federal tax return and attach Schedule 8812. To claim state tax refunds or credits, taxpayers need to check their state tax websites or forms for the requirements and procedures.

Table of Contents

What is the Child Tax Credit in the USA?

The Child Tax Credit (CTC) is a tax benefit that helps families with qualifying children reduce their federal income tax liability. For the 2023 tax year, the CTC is worth up to $2,000 per child under the age of 17, as long as the child has a valid Social Security number and meets other eligibility criteria¹.

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The CTC is nonrefundable, which means that it can only lower your tax bill to zero, but not below that. However, some taxpayers may be eligible for a partial refund of the CTC through the Additional Child Tax Credit (ACTC), which is worth up to $1,600 per child¹. The ACTC is refundable, which means that it can give you a tax refund even if you owe no tax or your CTC is more than your tax liability.

The amount of the CTC and the ACTC depends on your income, filing status and number of children. The full CTC is available to taxpayers who have a modified adjusted gross income (MAGI) of $200,000 or less, or $400,000 or less if married filing jointly. The CTC phases out by $50 for every $1,000 of income above these thresholds¹.

The ACTC has a refundability threshold, which is the greater of 15% of your earned income above $2,500, or $1,400 per child. This means that you need to have at least this amount of earned income to get any refund from the ACTC. The ACTC is also subject to a phase-in and a phase-out, which means that it increases gradually as your income rises, until it reaches the maximum of $1,600 per child, and then decreases gradually as your income exceeds the CTC phase-out thresholds¹.

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What is a State Tax Refund Check in the USA?

A state tax refund check is a payment that you receive from your state tax authority if you overpaid your state income taxes or qualified for a state tax credit or deduction. The amount and timing of your state tax refund check depend on your state tax laws, your filing status, your income and your deductions and credits.

Some states also offer tax refunds or credits specifically for families with children, which may be in addition to or separate from the federal CTC and ACTC. For example, California provides a Golden State Stimulus payment of $550 to eligible taxpayers who have at least one qualifying child and meet certain income and residency requirements². Colorado offers a Child Tax Credit of up to $800 per child under 6 for taxpayers who claim the federal CTC and have a state income tax liability³. Idaho provides a Grocery Credit Refund of up to $125 per child for taxpayers who are eligible for the federal CTC and have lived in Idaho for at least six months⁴.

Other states that offer tax refunds or credits for families with children include Maine, Maryland, Massachusetts, New Jersey, New York, Oklahoma and Vermont⁵. Each state has its own rules and procedures for claiming these benefits, so you need to check your state tax website or form for the details and instructions.

How to Apply for a Tax Refund?

To apply for a federal tax refund, you need to file a federal tax return and report your income, deductions and credits. You can file your tax return electronically or by mail, using Form 1040, U.S. Individual Income Tax Return, and attaching any relevant schedules or forms, such as Schedule 8812 for the CTC and the ACTC¹. You can also use a tax software program or a tax preparer to help you file your return.

To apply for a state tax refund, you need to file a state tax return and report your state income, deductions and credits. You can file your state tax return electronically or by mail, using the form provided by your state tax authority. You can also use a tax software program or a tax preparer to help you file your state return.

To get your tax refund faster and more securely, you can choose direct deposit as your payment method. Direct deposit allows you to receive your refund directly into your bank account, without waiting for a paper check to arrive in the mail. You can also split your refund into up to three accounts, such as a checking, savings or retirement account⁶.

To check the status of your federal tax refund, you can use the Where’s My Refund? tool on the IRS website or the IRS2Go mobile app. You can also call the automated refund hotline at 800-829-1954. You will need your Social Security number, filing status and exact refund amount to access your refund information⁶.

To check the status of your state tax refund, you can use the online tool or phone number provided by your state tax authority. You can find the links and contact information for each state on the IRS website⁷.

Conclusion

The Child Tax Credit and the Additional Child Tax Credit are federal tax benefits that can help families with children lower their tax bills or get a tax refund. Some states also offer tax refunds or credits for families with children, which can provide additional financial relief. To claim these benefits, you need to file your federal and state tax returns and report your income, deductions and credits. You can also check the status of your tax refunds online or by phone, and choose direct deposit as your payment method for faster and more secure delivery.

Source: (1) Child Tax Credit | Internal Revenue Service. https://www.irs.gov/credits-deductions/individuals/child-tax-credit. (2) The Child Tax Credit | The White House. https://www.whitehouse.gov/child-tax-credit/.