The Child Tax Credit is a type of tax credit that families with children can qualify for to receive a tax break.
What is the Child Tax Credit (CTC) and how might it apply to you? If you have young children living in your household as dependents, then you might qualify for this specific tax credit.
This tax credit, as with many tax credits, is susceptible to changes and adjustments. But essentially, it’s a tax break that some families with qualifying dependent children can qualify for to help with the costs of caring for children.
What is the Child Tax Credit (CTC)?
The Child Tax Credit (CTC) is a type of tax credit for taxpayers with dependent children. Families with children can claim this credit for each qualifying dependent child when they file their tax returns.
The Child Tax Credit has requirements and amounts that are susceptible to changes each year. Make sure you are familiar with the eligibility factors you need to meet in order to claim this credit before you file your tax return.
How Much is the Child Tax Credit?
The Child Tax Credit amount is up to $2,000 per qualifying child. How much of the Child Tax Credit you qualify to receive depends on several factors.
If you meet all of the eligibility requirements, then you may be able to claim the full amount for this credit. If you only meet some of the eligibility requirements, then you might be able to claim a partial credit.
Child Tax Credit Income Limit
The Child Tax Credit income limit is one of the main qualifications you’ll need to meet to receive this credit. It involves how much you make in annual income.
The Child Tax Credit requires your annual income to not be more than $200,000 or $400,000 if you’re filing jointly.
So if you make more than $200,000 or $400,000 if you’re filing jointly, then you might not qualify to claim this credit. But if you make less than $200,000 or $400,000 if you’re filing jointly, then you meet one of the first main requirements to apply this credit to your taxes.
Child Tax Credit Requirements
Who qualifies for the Child Tax Credit? There are several Child Tax Credit requirements that you will need to meet before you can qualify to claim this credit.
Both the adults and children involved in the use of this tax credit must all meet the following requirements in order to qualify for this tax credit.
Requirements for Adults
In order for a parent or guardian to qualify for the use of this tax credit, the adult must have an annual income that is not more than $200,000 or $400,000 if you’re filing jointly. Though, if you do make more than this in annual income, you may still be eligible for part of this credit.
- Annual income is no more than $200,000 or $400,000 if you’re filing jointly.
- Be related to the child (for example, the child is your child, stepchild, eligible foster child, sibling, step-sibling, half-sibling, grandchild, or your niece or nephew)
- Provide more than half of the child’s financial support
Requirements for Qualifying Children
In order for a child to qualify for the use of this tax credit, the child or each child involved must meet the following requirements to be considered a qualifying child.
- Each qualifying child has a social security number
- Be under 17 years old by the end of that tax year
- Be related to you (for example, the child is your child, stepchild, eligible foster child, sibling, step-sibling, half-sibling, grandchild, or your niece or nephew)
- Does not provide for more than half of their own financial support
- Has lived with you for more than half of that tax year
- Be claimed as your dependent on your tax return
- Does not file taxes jointly with a spouse
- Is a US citizen, US national, or US resident alien
How to Claim the Child Tax Credit
To claim the Child Tax Credit, you will want to fill out the Schedule 8812: Credits for Qualifying Children and Other Dependents tax form and attach this completed form to your 1040 tax return form.
Step 1: Fill out the Schedule 8812: Credits for Qualifying Children and Other Dependents tax form.
Step 2: Attach the Schedule 8812 tax form to your 1040 tax return form.
Is the Child Tax Credit Refundable?
The Child Tax Credit is partially refundable if you meet the ACTC requirements. This means that the tax credit amount a tax filer receives cannot exceed how much they owe in taxes to result in an increase in tax refund money unless they qualify for the ACTC, and then $1,700 of the credit is refundable.
Instead of going toward an increase in your tax refund, this tax break is meant to go toward decreasing the amount of taxes you might owe.
This is susceptible to change, in fact, legislation is currently working toward making a portion of the Child Tax Credit refundable. But as of the 2024 tax year, the Child Tax Credit is nonrefundable.
However, the Additional Child Tax Credit (ACTC) is refundable to families that meet certain requirements.
Additional Child Tax Credit (ACTC)
The Additional Child Tax Credit (ACTC) is a type of tax credit for taxpayers with dependent children whose Child Tax Credit amount exceeds the amount of taxes they owe. In other words, it is the potentially refundable portion of the Child Tax Credit.
So if you claim the Child Tax Credit, and you qualify to receive a Child Tax Credit amount that exceeds how much you owe in taxes, there is still a possibility you can receive that extra money as a refund by claiming the Additional Child Tax Credit (ACTC).
For example, for the 2024 and 2025 tax years, you can potentially receive up to $1,700 of the refundable portion of the Child Tax Credit for each qualifying child if you meet certain requirements for the ACTC.
If you earn an income of at least $2,500 (not excluding foreign-earned income) or you have 3 or more qualifying dependents, then you may be able to claim this additional credit, allowing you to receive a partial refund on this tax credit.
Other Child Tax Credits You Might Qualify For
There are other tax breaks available for parents and guardians with children. For example, you could also qualify for the Child and Dependent Care Credit, Adoption Credit, Credit for Other Dependents (ODC), or Additional Child Tax Credit (ACTC).
Child and Dependent Care Credit
The Child and Dependent Care Credit is also sometimes called the Child Care Tax Credit. It’s a type of tax credit that financially helps parents and caregivers with child and dependent care costs.
Who qualifies for the Child and Dependent Care Credit? You might qualify to claim this credit if you paid for the care of a qualifying individual in order for you to work, if you lived in the US for more than half that tax year, if the qualifying dependent is under 13 years old or a dependent of any age who is unable to take care of themselves and lives with your for more than half of the year.
Adoption Credit
The Adoption Credit or Adoption Tax Credit is a type of tax credit that aids families with the expenses associated with adopting a child.
Who qualifies for the Adoption Tax Credit? You might qualify to claim this credit if you paid qualifying adoption expenses like any reasonable and necessary adoption fees, court costs, attorney fees, traveling expenses, and other expenses related to adoption.
Credit for Other Dependents (ODC)
The Credit for Other Dependents (ODC) is a type of tax credit that helps tax filers who have qualifying dependents who don’t meet the criteria of the Child Tax Credit.
Who qualifies for the Credit for Other Dependents? You might qualify to claim this credit if you have dependents of any age, who have social security numbers (SSN) or individual taxpayer identification numbers (ITIN), are US citizens, nationals, or resident aliens, and who are being supported by the taxpayer.
