9/2024
Recently, news of proposed expanded child tax credits have been in the news. Some rumors have been swirling around, so here is a rundown:
Federal Child Tax Credit:
As it stands now, for the 2023 filing year, the child tax credit is a total of $2000, with $1600 possible to be refundable - meaning possible to receive as a refund in your bank account or as a check.
For 2024, this will increase to $1700. You can still only receive up to 15% of your income above $2500 as a refund, up to $1700 per child for the 2024 filing season.
If you're self employed, the refundable credit is used as a credit against self employment taxes.
If you're both employed and self employed, or one spouse is employed and one is self employed, it can become a mixture of a refund and credit against tax, or just a credit against taxes.
In early 2024, the Democrats proposed increasing the refundable credit to a higher amount $1800-$2000, and more importantly, proposed giving the full amount per child, with much lower income requirements.
This would have caused most people to get the full credit as a refund for each child. It did not exclude those living abroad, unlike the increased credit of 2021.
This law was never passed in the end, and some form of the proposal is expected to be proposed again after the presidential election this November.
Both the Democrats and Republicans have mentioned wanting to increase the credit, so it looks promising.
In fact, Trump's Vice Presidential candidate J. D. Vance said "I'd love to see a child tax credit that's $5,000 per child,".
In turn, Presidential candidate Harris proposed a child tax credit boost would give $6,000 for every newborn baby!
Right now these are just campaign promises, so we'll see what the final proposals will be and what Congress would actually agree to approve.
NY Child Tax Credit:
Called the Empire state child credit, only those who file as NY residents qualify.
NY recently increased it to up to $330 per child, and sent out checks to those who had received less than that, to make up for the difference.
NJ Child Tax Credit:
Only those who file as NJ residents qualify.
Since 2023, low income households can receive up to $1000 per child.
For 2022 this amount was $500, and no credit was given for 2021 and prior.
You may be required to file an NY or NJ return if you live temporarily abroad, so many expat families may qualify for this.
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