Child tax credit: Will taxpayers see more money in 2024?

(NEXSTAR) – If President Biden’s tax deal makes it through Congress, some taxpayers could see a sizable bump in the form of an expanded child tax credit, but the proposed bill has hit a stumbling block.

In late January, the House passed the measure, titled the Tax Relief for American Families and Workers Act, in a resounding 357-70 bipartisan vote. All momentum stopped, however, when it reached the Senate, where it remains stalled with roughly a month left in the tax filing season.

The current child tax credit is $2,000 per child, but not all of that is refundable. If passed, the bill would incrementally raise the amount of the credit available as a refund, increasing it to $1,800 for 2023 tax returns, $1,900 for the following year and $2,000 for 2025 tax returns. The bill also adjusts the topline credit amount to temporarily grow at the rate of inflation.

The measure, crafted by House Ways and Means Committee Chairman Jason Smith (R-Mo.) and Senate Finance Committee Chairman Ron Wyden (D-Ore.), would also reinstate business deductions eliminated during the Trump administration.

Resistance in the Senate

Despite the broad bipartisan support in the House, there hasn’t been an easy path through the Senate.

Some Senate Republicans opposing the bill have likened the refundable credit to welfare, pointing to the bill’s “look-back provision” that would allow parents to use earnings from the previous year to claim a larger credit.

“Allowing individuals to receive a refundable credit when they have zero annual earnings – as the prior year’s earnings provision allows – is a departure from longstanding policy tying the CTC to work,” Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) wrote in a statement.

Crapo said he hoped to come to a “mutually agreeable outcome” with the bill’s proponents, but added that each passing week has brought calls for “numerous modifications” and “increasing concerns about making 2023 changes this far into the IRS tax filing season.”

Others have criticized funding for the bill, which will come from the early elimination of a COVID-era tax break that has become notorious for fraud.

“How can any fiscal conservative defend using phony savings to pay for more spending?” Sen. Thom Tillis (R-NC) said in a Wall Street Journal op-ed. “It’s like paying off a credit card balance with another credit card.”

Despite the resistance from some in the Senate, along with the added difficulty of passing major legislation during an election year, there are a number of senators from both parties who are still optimistic that a deal will happen.

“I want to see something get done,” Montana Republican Sen. Steve Daines said Thursday, according to The New York Times. “I think we stand a good chance to pass it.”

Brian Gardner, chief Washington policy strategist at Stifel Investment Bank, told Nexstar in a statement that he thinks the bill’s chances are “slightly better than 50/50.”

“While Ranking Member Crapo wants some changes (and possibly a markup), there is broad bipartisan support for the bill which boosts its chances,” Gardner said. “If the Finance Committee winds up marking up the bill, then the bill’s chances would drop as the calendar would become the bill’s enemy.”

Should you wait to file taxes?

While there is still a chance that Congress will pass the bill and expand the child tax credit, experts say you shouldn’t wait to file taxes in hopes of padding your refund.

“If taxpayers are ready to file, they should go ahead and file,” Joshua Youngblood, a senior tax advisor with The Youngblood Group, told Nexstar.

In the case that the measure passes, IRS Commissioner Danny Werfel has assured eligible taxpayers that the IRS can retroactively handle any tax credit changes.

“In short – if you are due an additional refund, the service would be able to adjust it and process it,” Youngblood said. “This would not require an amended return.”

The Associated Press contributed to this report.