There are just a few days left until the tax day deadline, which will take place on April 15, and the legislation to expand the child tax credits for American families still has not made significant progress in the Senate. The Center on Budget and Policy Priorities warns that the proposed expansion of the child tax credits should be approved soon, to benefit some 16 million children, including 5.8 million under the age of 6, while urging Congress to make progress on this issue.
IRS Commissioner Daniel Werfel stated on February 15 that the agency is closely monitoring the status of the bill in the Senate and is “ready” to act “quickly” in order to implement the expansion of the child tax credit, if the bill becomes law soon. The IRS, following Werfel’s comments, announced on February 21 that, if Congress modifies the credit guidelines, adjustments will be made automatically for those taxpayers who have already filed their return in a timely manner, avoiding the need for additional actions by these taxpayers eligible for the child credit.
Proposed Child Tax Credit for 2024: What You Need to Know
The proposed changes to the $2,000 child tax credit would span three tax years, namely 2023, 2024 and 2025. The above mentioned means that this tax season, when filing the 2023 tax returns, the extended credit could be claimed.
The credit would still be partially refundable, meaning they could get a refund even if they don’t have to pay taxes or have no debts. The new rules would increase the maximum refundable amount of $1,600 per child. In fiscal year 2023, this amount would increase to $1,800; in 2024, to $1,900; and in 2025, to $2,000, adjusted for inflation in the last two years.
The rest of the $2,000, after the refundable amount ($200 for fiscal year 2023) would be non-refundable. This means that the tax credit could only be used to pay taxes – once the tax bill reaches $0, there will be no additional refund.
Could We Expect This Extended Tax Credit Any Soon?
In testimony before the House Ways and Means Committee on Feb. 15, Werfel of the IRS stated that the entity is closely monitoring the status and progress of the bill, and promised to act as quickly as possible when it becomes law (if it ever happens).
With the experience of child tax credits sent during the coronavirus pandemic, the IRS already has the muscle to make the implementation of money transfers to qualifying families expeditious and accurate. Werfel promised that the implementation would take place within 6 to 12 weeks after approval.
“Taxpayers should not wait for this legislation to file their returns. We will take care of getting any additional refunds to taxpayers who have already filed. They won’t need to take additional steps,” such as filing an amended return, Werfel added.