Earlier this year, the federal Child Tax Credit seemed poised for an expansion that could have potentially lifted hundreds of thousands of children out of poverty. However, the expanded CTC did not come to fruition before the April 15 tax deadline, leaving its future uncertain.
The legislation, known as the Tax Relief for American Families and Workers Act of 2024, was easily approved by the House in February with bipartisan backing. Nevertheless, it is currently stuck in the Senate, with Senator Josh Hawley, a Republican from Missouri, indicating to NBC News earlier this month that the bill is hanging by a thread.
Many parents were closely monitoring the progress of the bill because it included a provision that might have increased their tax refund for the 2023 tax year, which is also due on April 15 (unless an extension is requested.) The expanded CTC was set to raise the maximum per-child refund amount to $1,800, up from the current $1,600.
Tax Filing Advice: Experts Warn Against Delaying
Experts in the field of taxation are advising against delaying the filing of your taxes in anticipation of potential tax legislation. The political process is known for its unpredictability, making it risky to wait for new laws to pass. While the standard tax-filing deadline is April 15, taxpayers have the option to request an extension that would grant them until October 15 to submit their returns to the IRS.
"Don't procrastinate when it comes to filing your taxes," cautioned Mark Jaeger, the vice president of tax operations at TaxAct, in an interview with CBS MoneyWatch. "While it's not impossible for new legislation to be introduced — there are supporters on both sides of the political spectrum — it's not something I would bet on."
Child Tax Credit: Potential Implementation in 2024
The Tax Relief for American Families and Workers Act has yet to be scheduled for a vote in the Senate. According to a report by the New York Times, Republicans have raised objections to certain provisions within the bill.
One contentious issue is the inclusion of a "look back" provision, which would enable parents to utilize income from a previous year to increase the amount they could claim through the Child Tax Credit (CTC). Some Republican legislators argue that this provision might reduce parents' motivation to work, as reported by Politico.
Despite the opposition, advocates remain optimistic about the possibility of the tax bill being approved. The National Parents Union, a parental advocacy organization, called on lawmakers during an April 10 rally to advance the legislation swiftly.
"Both Republicans and Democrats, doesn't matter what area of the country we're talking about — there is unanimity," said National Parents Union co-founder Keri Rodrigues in a statement. "American families are in support of this Child Tax Credit."
What happens if expanded CTC goes into effect after you file?
If Congress passes the legislation, the IRS says it will automatically make adjustments for parents who already filed and claimed the CTC.
The IRS is urging taxpayers not to wait to file their 2023 tax returns in anticipation that Congress could pass the expanded Child Tax Credit.
What can parents claim for the 2023 Child Tax Credit?
Without the bill's passage, the Child Tax Credit is $2,000 for each eligible child for the 2023 tax year.
There is an income limit for claiming the $2,000 credit, which is $200,000 in adjusted gross income for single filers and $400,000 for joint filers.
A portion of that $2,000 credit is considered fully refundable, which means that you can receive it as a tax refund even if you don't owe any federal taxes. That's noteworthy because some tax credits will at most reduce your tax liability to $0, and any amount of the credit beyond that has no impact on your refund.
But in the case of the CTC, the tax credit is refundable up to $1,600 per child, potentially boosting their tax refund by that amount.
