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Taxpayers who file a return can claim tax credits and deductions, as long as they meet the requirements for each benefit.
The Internal Revenue Service (IRS) announced Thursday, Nov. 5 the inflation adjustments for tax year 2027. Among the benefits updated was the Child Tax Credit (CTC).
When will US$1,800 be deposited into eligible applicants’ bank accounts?
The $100 increase will apply both to the total credit, which will reach $2,300, and to its refundable portion, which will rise to $1,800.
This increase will be reflected in income earned during tax year 2027 and will apply to returns filed with the agency in 2028.
For the upcoming tax season, the amounts will remain as follows:
- Child Tax Credit (CTC): $2,200.
- Additional Child Tax Credit (ACTC): $1,700.
These are the amounts that can be claimed during the 2027 tax season.
Who can claim this tax credit?
Taxpayers with children under 17 at the end of the tax year who meet the requirements set by the IRS may claim this credit.
For a child to be considered eligible, the following conditions must be met:
- Age: the child must be under 17 at the end of the tax year.
- Relationship: the child must be the taxpayer’s child, stepchild, eligible foster child, sibling, half-sibling or a descendant of any of them.
- Residence: the child must have lived with the taxpayer for more than half the year.
- Support: the child must not have provided more than half of their own support.
- Dependent status: the child must be claimed as a dependent on the tax return.
- Social Security number: both the taxpayer and the child must have a valid Social Security number for work in the United States, issued before the tax return filing deadline.
How should the Additional Child Tax Credit be claimed on Form 1040?
Taxpayers who qualify for the CTC but cannot use the full amount because their federal tax liability is low or zero could be eligible for the Additional Child Tax Credit (ACTC).
This is the refundable part of the benefit and allows taxpayers to receive money even when the credit is larger than the taxes they owe.
To claim it, they must follow these steps:
- 1. Complete Form 1040: include eligible children and other dependents on the federal tax return.
- 2. Attach Schedule 8812: use this form to calculate the CTC, the ACTC and the credit for other dependents.
- 3. Verify income: to get the ACTC, they must report at least $2,500 in earned income and meet the other eligibility requirements.