Errors are common throughout the busy tax season, particularly when claiming credits such as the Child Tax Credit. If you are a freelancer or have several sources of income, filing taxes can be challenging. It becomes even more difficult if you want to claim tax rebates.
You may be denied much-needed credits and refunds even though you are legally entitled to them if your taxes were not submitted correctly. Because it can determine whether you receive a tax break or not, you must be extremely careful when reporting your income.
Avoid these errors when submitting your Child Tax Credit claim
One of the most well-known tax credits is the Child Tax Credit. It is intended especially for low-income families with young children and is used by millions of households.
You can also be eligible for the Additional Child Tax Credit, which is the Child Tax Credit’s equivalent. But a lot of parents continue to claim this credit incorrectly, which means they are losing out on the reduction in their tax liabilities.
Not utilizing the tax credit
Even with its widespread use, some families are still not aware that they qualify for the benefit. For each eligible child, the Child Tax Credit is worth $2,000 for the fiscal year 2024–2025. Up to $1,700 of the $2,000 is refundable for each child. Many families believe the credit is applied automatically, which is one of the reasons they do not claim it.
This isn’t the case, though. After filing your income taxes, you must submit a separate application for the credit.
Not verifying your child’s eligibility requirements
Some families may not thoroughly review the qualifying requirements, while others are completely unaware that they qualify for the tax credit.
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If you had made sure you were eligible for the credit, you could have prevented their application being denied and the disappointment that follows.
In addition to meeting certain income requirements, your child must also fulfill certain requirements in order to be eligible for the credit. If you’re not sure, the IRS website details the precise requirements your child must fulfill in order for you to be eligible for the credit.
Not fulfilling the requirements for qualifying income
Particularly targeted for low-income families is the Child Tax Credit. Therefore, in order for you to be eligible for the credit, your income needs to be below a specific threshold.
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If a family’s income is higher than the specified income restrictions, their application for the credit will be denied. Couples filing jointly may not earn more than $400,000 if they want to claim the tax credit, while single filers must make less than $200,000 annually to qualify.
If you need help, always get in touch with an expert
The process of filing taxes can be complicated, and it can be particularly intimidating if you need to provide extra documentation for tax refunds, such as the Child Tax Credit.
In addition to free tax advice and services for those who are retired, disabled, or satisfy the IRS’s income thresholds, the IRS offers free resources on its website.
It’s possible that your state offers a child tax credit that you might apply for in addition to the federal one. With the help of the Child Tax Credit programs in 16 US states, millions of families may more easily pay their taxes.
You can be eligible for more refunds than you realize, so always be sure you understand your tax rights.
