Understanding Key Tax Credits for Families in 2024

                                                                                                                                                              

Do you know how tax credits can benefit your family this tax season? Tax credits like the Child Tax Credit (CTC), Earned Income Tax Credit (EITC), and Child and Dependent Care Tax Credit (CDCTC) can significantly impact your tax returns. Let’s dive into what these credits mean for you in 2024.

Child Tax Credit (CTC)

The CTC is here to ease the financial burden of raising children. For each qualifying child, you could receive up to $2,000. If this credit exceeds the taxes you owe, you might get up to $1,600 back in your tax refund. To qualify for a refund, or the Additional Child Tax Credit (ACTC), you need at least $2,500 of earned income in 2023.

Both you and your spouse, if applicable, can claim the CTC using a Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN). Remember, the children you’re claiming must have an SSN.

Earned Income Tax Credit (EITC)

The EITC is designed to give a financial boost to those who earn money from a job, whether you’re single, married, with or without children. The credit amount varies; for instance, in 2024, adults without kids at home can receive up to $600, while families can claim up to $7,430.

To be eligible for the EITC without a qualifying child, you must be aged 25-64. The credit you claim in 2024 is based on your 2023 earnings.

Child and Dependent Care Tax Credit (CDCTC)

This credit supports families paying for childcare, enabling them to work or look for work. It also applies to the care of an incapacitated spouse or adult dependent. Unlike some other credits, the CDCTC is not refundable, but it can reduce the taxes you owe.

To claim this credit, keep track of your childcare expenses in 2023. The credit can be up to $1,050 for one qualifying person or $2,100 for two or more. You’re allowed to claim expenses up to $3,000 for one person or $6,000 for multiple.

Understanding these credits can make a big difference in your tax filings. Be sure to consult a tax professional to maximize these benefits and check out our detailed guides on each credit for more information.

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Written by Sonali Hutson, the founder of Small Business Tax Solutions. With 15 years of experience in tax consulting and a passion for empowering small businesses, Sonali specializes in providing insightful tax strategies and solutions. Dedicated to helping entrepreneurs navigate the complexities of small business taxation, she believes in making tax advice accessible and understandable. 

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