$300 Child Tax Credit Direct Deposit – What to Expect for 2024

A viral post on social media recently sparked confusion by claiming that the IRS would be making monthly direct deposits of $300 to families with children under six in 2024. The post suggested that children between the ages of six and 17 would receive $250 per month, beginning on July 15, 2024.

However, this claim was inaccurate, as it referred to a one-time measure under the American Rescue Plan of 2021, which provided advance monthly Child Tax Credit (CTC) payments to support families during the COVID-19 pandemic. Here’s a look at what happened to the Child Tax Credit in 2024 and the current state of this tax benefit.

Child Tax Credit Program

In 2021, the American Rescue Plan temporarily expanded the Child Tax Credit as part of the COVID-19 relief efforts. During this period, eligible families received advance monthly payments of up to $300 per child under age six and $250 for children aged six to 17.

These payments, made from July to December 2021, were intended to provide financial support to families during the pandemic. However, this temporary measure was not extended beyond 2021, and the Child Tax Credit reverted to its previous structure in 2022.

Child Tax Credit

In 2024, the Child Tax Credit returned to its original form, a partially refundable tax credit. Here’s how it works under the current system:

• Non-refundable credit: Taxpayers with dependent children can claim a non-refundable credit of up to $2,000 per child, which reduces their tax liability.
• Refundable portion: If the tax liability is reduced to $0, families may qualify for a refundable portion of the credit, known as the Additional Child Tax Credit (ACTC), which offers up to $1,600 per child.

This means families can apply the Child Tax Credit to reduce their taxes, and if there is still remaining credit after reducing the tax to $0, they may receive up to $1,700 per child as a cash refund.

Proposals

The concept of reinstating the expanded Child Tax Credit has reappeared in recent political discussions. President Biden’s proposed 2025 budget included funding to reintroduce the expanded Child Tax Credit with monthly payments similar to those in 2021. However, with the Republican-controlled House, this proposal is unlikely to be enacted due to differing views on budget priorities and the upcoming election cycle.

In January, the House of Representatives did pass a bill aimed at making the Child Tax Credit fully refundable, similar to the expanded structure in 2021. Yet, this initiative has not advanced to a vote in the Senate, stalling any progress toward reinstating a monthly payment option.

How to Claim

Currently, families with dependent children can still claim the Child Tax Credit, though it must be done on their annual tax return, rather than through advance monthly payments. Here’s how it works:

1. Eligibility requirements: The family must meet income and other eligibility criteria to qualify for the credit.
2. Filing: Eligible taxpayers can claim the credit on their federal income tax return, which reduces their taxable income and can provide a tax refund.
3. Partial refundability: If your tax obligation is zero, you may receive a partial refund of the credit (up to $1,700 per child).

The Child Tax Credit remains an essential tax benefit for millions of families, but knowing the current structure and filing requirements is crucial to maximizing the benefit.

The expanded Child Tax Credit may return to the policy discussion in 2025, yet for now, families should rely on the existing credit structure. While the monthly payment system of 2021 offered immediate financial support, the current program still provides valuable tax relief for families, although in a different form.

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