The 2025 tax season enables families to boost their refund via the Illinois Child Tax Credit (CTC). Built on existing federal or state tax benefits, it aims to reduce the financial burdens for guardians or parents through direct income tax relief. Though finalized details for 2025 aren't available, the credit should follow previous years' guidelines, targeting lower- to middle-income homes.
In addition to other Illinois income tax credits, such as the Earned Income Credit, the CTC significantly increases refunds or lowers your tax bill. Be informed and understand the eligibility requirements to access these financial benefits.
Eligibility Requirements for the 2025 CTC in Illinois
The Illinois CTC for 2025 will provide financial relief, though not every taxpayer qualifies. Understanding the criteria is essential to claim the credit when filing your taxes.
Here's what you need to know:
You and your child must be Illinois residents for at least part of the tax year.
You must file an Illinois state tax return.
Your child must be under 17 at the end of the year.
The child must be your son, daughter, foster child, sibling, or stepchild.
You must claim the child as a dependent on your tax return.
Illinois bases its CTC on income, so higher earners are ineligible.
Though the exact 2025 thresholds aren't final, past credits have targeted low-to-middle-income families. Even if you don't qualify for the federal CTC, you might still be eligible for the Illinois version.
How To Apply for the Illinois CTC
If you meet the requirements, claiming the Illinois CTC for 2025 is straightforward. Here's a step-by-step guide to ensure you get the maximum available credit.
Confirm Eligibility
Before applying, verify that you and your children meet the income, dependency, and residency requirements. If you have at least one dependent child under 17, you qualify for the 2024 tax year; the CTC is computed as 20% of the Illinois Earned Income Tax Credit.
File the Illinois State Tax Returns
Claim the credit by filing Form IL-1040. If you file electronically, the tax software can automatically apply the credit if you qualify. If filing by mail, ensure you complete the correct sections related to the tax credit.
Next, provide the required documents, including the social security numbers for the requester and their qualifying child. Income verification is also essential to confirm you fall within the set limits.
Regularly Check the Status of the Application
Finally, submit and track your refund. The IRS usually starts accepting returns by late January. Check your refund status to see if the credit reduces your tax liability or increases the refund. Similarly, check for updates from the Illinois Department of Revenue. The credit amount and income threshold may differ from previous years.
Calculating the Credit Amount
Though the set Illinois CTC for 2025 is not yet final, it's possible to estimate how it will work based on past years. The expected credit value in 2023 was up to $300 per child under 17.
For 2025, the set amount may remain the same or increase. This credit is usually refundable, so it's possible to receive it even if you owe no taxes. As the requester, you could receive $900 or more in tax credits if you have three qualifying children. The federal CTC differs from Illinois' credit, and you may claim both if eligible.
Impact on Tax Filing and Returns
The Illinois CTC may lower your taxation bills or increase your refund differently. One way is by reducing tax liabilities. If you owe state taxes, this credit will reduce your liability. Second, it boosts the refunds. As the credit can be refunded, even if you don't owe taxes, you could receive the full amount as a refund.
Consider e-filing for faster refunds, which can be in three weeks. Double-check eligibility to avoid any delays from incorrect claims. If you have the credit renewed after 2025, factor it into your long-term family budgeting.
It would be best to enlist the services of a tax professional, especially if the filings are complex. In addition to the CTC, experts identify some of the overlooked deductions, including the Earned Income Tax Credit, which one in five eligible taxpayers miss out on.
Changes and Updates for 2025
In 2025, the Illinois CTC may undergo significant updates compared to previous years as lawmakers refine policies. Something that could affect the filing is the potential increase in the credit amounts. There are hints that the credit amount should increase per child. Expanded eligibility may also occur. Only children below 17 qualify, but there are proposals for extending this set age.
The Illinois CTC should remain refundable, meaning you can receive full credit even if you owe no state taxes. Even a slight adjustment might mean hundreds of dollars more for Illinois families. If the credit continues expanding, more taxpayers may see additional financial relief.
Resources and Assistance
Navigating tax credits may be complicated, but Illinois provides resources to assist you in claiming the CTC. Here are some official assistance programs and organizations:
The Illinois Department of Revenue: This offers detailed explanations of CTC eligibility.
IRS Free File Program: Some providers may include the Illinois state returns at zero cost.
Illinois Legal Aid Online: It determines if you may qualify for the CTC, earned income credit, and other credits.
Volunteer Income Tax Assistance: It's for households that earn $64,000 or less annually or people with disabilities.
Learn More at Pasquesi Sheppard
The Illinois CTC for 2025 helps families get a tax break, but only if they take the necessary steps. Understanding the eligibility requirements, updates, and application process will increase your chances of maximizing your refund.
Contact our Pasquesi Sheppard team to learn more about the process, including how to file for individual taxes, whether you file independently or with our assistance. Call 847-234-5000 for a consultation.