In a new relief for American Families, the Child Tax Credits are likely to be increased for eligible households as the Bipartisan Bill, called the Tax Relief for American Families and Workers Act of 2024, which has already been passed by the Congress is looking to be voted on next by the Senate. If it is passed it could potentially impact the 2023 tax season, the parents might be able to save the more on their taxes or at lest get a bigger refund.
The Child Tax Credit Bill, backed by the President Joe Biden, was voted 40-3 by the Ways and Means Committee of the House in mid-January to send the legislation to the floor of the House.
Present Scenario of Child Tax Credit
Right now if you have a child under age 17 and you make less than $200k as a single or head of household, $400k as a married filing jointly, you are entitled to $2,000 per child. Some people who don’t pay any taxes also get benefit. Part of this is credit which is $1600 is called refundable, and is payable to even if someone don’t owe taxes.
New Proposals in the Child Tax Credit Bill
According to the legislation fact sheet, the Child Tax Credit bill index the $2000 cap for inflation in tax years 2023-2025 which would be rounded for the nearest $100. So the refundable amounts raise to $1800 for 2023, $1900 for 2024 and $2000 for 2025.
Who Benefit the Most with the Bill?
Right now it is estimated that 19 million kids don’t qualify for the tax credit because their parents don’t have any taxable income. The new Child Tax Credit Bill allow the credit to be calculated on a per-child basis which means more people would get more money. Credit is important because it reduces household’s tax bill dollar for dollar.
According to the think tank The Centre on Budget and Policy Priorities found that the bill has the potential to bring 400,000 – 500,000 kids above poverty line. Furthermore, the expanded credit would impact 16 million children of low income group.
When Will the IRS Send Your Credit Refund?
The Child Tax Credit Bill is one step closer from being approved. Upon approval by the Senate, it could put more money into households pocket. However, given the scenario, it could take longer than 21 days to get the refund if an individual is claiming the credit. The IRS in this regard has updated that, “when the tax credit is to be claimed, a tax credit form is to be attached with the 1040 form but no child tax credit will be paid until the end of February”.
It is recommended that if you are in line to receive the benefit, you may have to wait a few weeks before you are filing your taxes. But make sure you don’t wait too long that you miss the April 15th deadline to avoid the 5% penalty that the IRS charges for each month that the tax returns is late.
When Will the IRS Start Implementing the New Changes?
Depending upon the Bills final language, it could take six to twelve weeks to issue funds to IRS. The IRS then would start implementing the new changes. In this regard, it has to be noted that the taxpayers should not wait for the legislation to file their returns.
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