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Do you need to work to claim the child tax credit?

With payments for the enhanced child tax credit slated to begin in July, questions around work requirements and claiming the benefit have arisen.

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Do you need to work to claim the child tax credit?
JONATHAN ERNST REUTERS

According to the Child Defense Fund (CDF), more than 2.5 million children have fallen into poverty since early in the pandemic. This is driven by a variety of factors including loss of income as millions lost their jobs and struggled to navigate complicated unemployment benefit systems and parents who had to leave their work in order to care for their children at home.

Work and Income Requirements

There are no specific work requirements to redeem the child tax credit. However, there are income limits. The IRS, which periodically provides an update on the status of the program and when they expect to begin making payments has said that the credit will be sent to families making under $150,000 for married taxpayers who file jointly, $112,500 for heads of household, and $75,000 “for all other taxpayers.”

Families with incomes over these limits may be entitled to partial credits but the payments begin to be phased out as the income increases.

Before families needed an income of at least $2,500 to receive partial benefits and could only redeem the full value of the tax credit if they made at least $30,000 a year. This left many families out, including working-class families trying to survive on minimum wage, who could have benefited from this type of government support.

The CDF has stated that the changes in income requirements will “extend eligibility to the 23 million children—disproportionately Black and Latinx children—who previously did not qualify because their families make too little.” 

Researchers have modeled the possible impacts this tax credit could have on reducing child poverty in the US and the results are astounding. Some reports show that the tax credit could cut the poverty rate for children in half, and have many child advocates pushing the federal government to make the changes permanent to avoid having families fall back into poverty once the credit expires. Additionally, there are economic and social benefits to limiting child poverty, including research that shows child “allowances” can create “long-term benefits for children’s educational attainment, employment, and health.”

The American Families Plan, one of the pieces of economic recovery legislation President Biden has put forward would extend the tax credit through 2025.

How much are families eligible to receive?

There are no limits on the number of dependents the tax credit can be claimed for. For children under six, the credit is worth up to $3,600, and for those between six and seventeen years old, the value of the credit is $3,000.

According to Investopedia, dependents can also include “siblings, grandchildren, and nieces and nephews if they meet the dependency, age, citizenship, and residency requirements. Adopted and foster children also can qualify for the credit.”