The Tax Credit in the United States is a crucial tool to ease the financial burden on families, especially those with children. This benefit allows taxpayers to reduce their attorney obligations, which can mean considerable financial relief. Currently, families can get up to $2,000 for each child under the age of 17, along with additional benefits for older dependents.
While this program has been key since its inception, recent changes have broadened its scope and the benefits available, most notably an increase in the refundable portion of the credit. This makes the Tax Credit even more attractive to eligible lower-income families. In addition, by 2025, significant adjustments to the current rules are expected, affecting both the amounts and eligibility criteria.
However, an important question arises for many people: can families take advantage of this benefit while they are getting other help, such as Social Security retirement? To better understand the situation, it is best to analyze the requirements and conditions for accessing the Tax Credit, as well as its compatibility with other benefits in the U.S. system.
How do I get the Tax Credit?
The Child Tax Credit (CTC) is a tax benefit for parents with children under the age of 17 who meet certain conditions. In its current format, it allows you to get a credit of up to $2,000 for each eligible child, and up to $1,600 can be refunded if the credit exceeds the tax due. In addition, older dependents, such as students ages 19 to 24 or seniors who meet specific requirements, may get a $500 nonrefundable credit .
Major CTC requirements:
- Children under age 17 who are citizens or legal residents of the United States.
- Adjusted gross income not exceeding $200,000 for single parents or $400,000 for married couples.
- For families with lower incomes, the refundable portion (ACTC) is limited to a percentage of earnings above $2,500, meaning that those who work less or earn less than this amount may not qualify.
It is important to note that this credit is not fully indexed to inflation, except for the refundable portion, which increases gradually. By 2030, this amount will reach a full $2,000, but is currently set at $1,600.
Since 2018, an additional $500 credit was established for dependents who do not qualify under the main credit, such as teenagers over 17 or adult dependents. This change expanded the scope of the program, benefiting families that previously did not qualify under the traditional rules.
Beginning in 2025, the credit will return to its pre-2017 tax reform form, which will mean a significant reduction in benefits. Families should prepare for these changes and analyze how to optimize their access to the credit before the changes take effect.
Can I have Tax Credit and collect Social Security retirement?
One of the most common questions is whether the Tax Credit is compatible with Social Security retirement payments. The answer is that, in most cases, you can get both benefits, as long as you meet the specific requirements of each program.
The Tax Credit is designed primarily for families with dependents, while Social Security retirement is based on earned income accumulated over a lifetime of employment. However, there are some conditions to consider:
- Minimum income: to claim the refundable portion of the CTC (ACTC), you need to have earned at least $2,500 during the tax year. This can be a hurdle for retirees with low income or no recent work activity.
- Tax Impact: Social Security payments generally do not affect eligibility for the Tax Credit, but retirees should make sure their adjusted gross income does not exceed the limits established for the credit.
It is critical to remember that Social Security and the Tax Credit are separate programs with different purposes and criteria. Families combining both benefits should consult with an attorney to maximize the benefits available.
Taking full advantage of the Tax Credit can make a big difference for families, especially those with dependents. With changes coming in 2025, planning ahead will be key to ensuring access to current benefits before they are reduced.
