Tax season is underway, and millions of families are looking ahead to their federal refunds. Parents who claim the child tax credit often wonder whether that credit could delay their money from arriving. Under certain circumstances, the refundable portion of the child tax credit does require the IRS to hold refunds until mid-February. But now that the filing deadline is approaching, most people who have not yet filed should not worry about a child tax credit-related delay.

The child tax credit helps families with dependent children lower their federal income tax bill. For the 2024 tax year, you can reduce your taxes by up to $2,000 for every qualifying child who was under age 17 at the end of the year. In some cases, the credit can go beyond reducing taxes to zero and generate a refund. That refundable piece is known as the additional child tax credit, and it is the part that can trigger a short wait.

Key facts to know about the child tax credit

• The maximum federal child tax credit for 2024 is $2,000 per qualifying child.
• The child must be younger than 17 at the end of the tax year and have a valid Social Security number.
• The nonrefundable portion of the credit can reduce your tax bill to zero.
• The refundable additional child tax credit can pay up to $1,700 per child.
• Refunds including the additional child tax credit are not issued before February 15 by law.
• Most e-filing taxpayers with direct deposit should receive such refunds by early March.

The child tax credit has been a part of the U.S. tax code for decades. It allows taxpayers to subtract a fixed amount from their federal income tax for each child who meets certain requirements. For the 2024 tax year, the credit begins to phase out for higher-income filers. The phaseout begins at $200,000 of modified adjusted gross income for single filers and $400,000 for married couples filing jointly. For every $1,000 of income above those thresholds, the credit is reduced by $50.

To qualify, a child must pass several tests. The child must be under 17 at the end of the tax year. The child can be your son, daughter, stepchild, foster child, sibling, or a descendant of any of those relationships. The child must live with you for more than half the year and must not provide more than half of their own support. In addition, the child must have a Social Security number that is valid for employment in the United States. Parents sometimes misunderstand these rules, especially when children are in shared custody or when a relative other than a parent claims the child.

How much money could you get?

Under current federal rules, the maximum child tax credit is $2,000 per dependent child. That amount applies to children younger than 17 at the end of 2024. The credit is considered nonrefundable, which means it can lower the amount you owe in taxes. If the credit is larger than your tax liability, the leftover amount is not automatically refunded. Instead, you may be able to claim the additional child tax credit, which is refundable.

The additional child tax credit is a separate but related tax break. For the 2024 tax year, it allows you to get up to $1,700 back per qualifying child if you have little or no income tax liability. This refundable credit is based on your earned income. In most cases, the credit is equal to 15 percent of the earned income you have above $2,500, up to the maximum of $1,700 per child. Families with three or more qualifying children may use an alternative formula that can provide a larger credit.

For example, suppose a married couple owes $500 in federal income tax after deductions and other credits. They have two children, so their child tax credit would normally be $4,000. The $500 tax bill would be wiped out, leaving $3,500 in unused credit. Because the additional child tax credit is refundable, the couple could receive up to $3,400 back if both children qualify and they meet the earned-income requirement. That money can make a meaningful difference for families who are struggling with household costs.

Why would your refund be delayed?

The delay tied to the child tax credit comes from a law known as the Protecting Americans from Tax Hikes Act, or the PATH Act. Congress passed this law in 2015 to help prevent fraud and improper payments. The earned income tax credit and the additional child tax credit are frequent targets for identity theft and false claims. To give the IRS extra time to verify those claims, the law says refunds that include these credits cannot be released before February 15.

If February 15 falls on a weekend or a federal holiday, the release date moves to the next business day. This year, the earliest date passed without any extension. The IRS has stated that taxpayers who file electronically, choose direct deposit, and claim the earned income tax credit or the additional child tax credit should generally receive their refund by March 3. Because that date has already passed, anyone filing now should not experience a delay based solely on the child tax credit.

It is important to note that the PATH Act hold applies only to refunds that include the refundable additional child tax credit. If your child tax credit is fully used to offset taxes you owe, you are not claiming a refundable amount. In that situation, there is no extra money to issue, so the mid-February waiting period does not apply. The IRS can still hold your refund for other reasons, but not because of the child tax credit rules.

When will your refund arrive if you already filed?

If you filed early in the season and claimed the additional child tax credit, the IRS was required to wait until mid-February to release your refund. After that waiting period, the money should have been sent through the refund method you selected. For most people, that means direct deposit into a bank account. If you chose a paper check, it will take longer to arrive because of mailing and processing time.

The IRS typically issues most refunds within 21 days of accepting an e-filed return. However, that timeline can be extended for returns that need manual review, such as those with missing forms, incorrect Social Security numbers, or questions about dependents. If you filed electronically and chose direct deposit, you can track your refund using the IRS online lookup tool. The tool is updated once a day, and it usually shows a personalized refund date within about 24 hours after the IRS accepts your return.

What if you have not filed yet?

If you have not yet submitted your 2024 federal income tax return, there is no reason to avoid claiming the child tax credit because of a delay. The mid-February hold is already over. As long as you file on time, your refund should be processed normally. The key is to file accurately and completely. Simple math errors, missing W-2 forms, or mismatched dependent information can cause the IRS to hold your return while it reviews your records.

To speed up your refund, file electronically. The IRS strongly recommends e-filing because it reduces mistakes and gives you an immediate acknowledgment. Choose direct deposit to avoid the extra time required for paper checks. Double-check every Social Security number on your return, including those of your children. If you are claiming a dependent, make sure you have proof of their age and relationship, such as a birth certificate, school record, or medical document. The IRS may ask for this information later if it reviews your claim.

Tax Day for 2024 returns is April 15, 2025. If you owe money, you should pay by that date to avoid interest and penalties. If you are due a refund, there is no penalty for filing late, but you could lose money if you wait too long. The IRS has a three-year window for claiming refunds from a particular tax year. After that, unclaimed refunds become the property of the U.S. Treasury.

History and future of the child tax credit

The child tax credit was first introduced in 1997 at $500 per child. It was later increased to $1,000 per child under the Bush-era tax cuts. The Tax Cuts and Jobs Act of 2017 temporarily raised the credit to $2,000 per child and improved the refundable portion. Those changes are scheduled to expire at the end of 2025. If Congress does not act, the credit would drop back to $1,000 per child under permanent law, and the income phaseout rules would change as well.

During 2021, the American Rescue Plan temporarily expanded the child tax credit even further. Families received up to $3,600 per child under age 6 and up to $3,000 per child between ages 6 and 17. The credit was also made fully refundable, meaning families could receive the entire amount even if they had no earned income. Monthly advance payments went out to millions of households starting in July 2021. That expansion lasted only one year, and in 2022 the credit returned to $2,000 per child with the earned-income requirement for the refundable portion restored.

There is ongoing debate in Congress about the future of the child tax credit. Some lawmakers have proposed expanding the credit again, increasing its refundable amount, or making the current $2,000 credit permanent. Others want to tie the credit to work requirements or adjust the income phaseout thresholds for inflation. Because these proposals involve significant federal spending, it remains unclear what will happen after the current tax year. For now, families filing their 2024 returns should rely on the rules in place for this filing season.

In addition to the federal child tax credit, many states operate their own child-related credits. Some states, including California, Colorado, Maryland, Massachusetts, and New York, offer refundable credits that can provide another boost for families. These state credits may be paid at different times and have different eligibility rules. If you live in a state with a child tax credit, you should check with your state tax agency to see whether you qualify and how it interacts with your federal credit.

Families who claim the child tax credit this year should also remember that other tax breaks can affect their refund. The earned income tax credit is available to low- and moderate-income workers, and it is also subject to the PATH Act delay. Tuition credits, dependent care credits, and energy-efficiency credits can all change the amount you owe or the size of your refund. Careful planning and accurate filing remain the best ways to avoid delays and get the money you are owed.

Source:CNET News