Child Tax Credit

The Child Tax Credit (CTC) is a valuable federal tax credit that reduces tax liability for taxpayers with qualifying children under age 17. This credit directly reduces the amount of tax owed dollar-for-dollar, with a portion being refundable as the Additional Child Tax Credit if the credit exceeds your tax liability. The CTC represents one of the most significant tax benefits available to families with children, providing substantial financial relief to working parents.

For 2024, the Child Tax Credit provides up to $2,000 per qualifying child, with up to $1,600 of that amount refundable through the Additional Child Tax Credit. To qualify, the child must be under age 17 at the end of the tax year, be your son, daughter, stepchild, foster child, sibling, or descendant of any of these, be claimed as your dependent, have a valid Social Security Number issued before the tax return due date, have lived with you for more than half the year, not have provided more than half of their own support, and be a U.S. citizen, U.S. national, or U.S. resident alien.

The credit begins to phase out for higher-income taxpayers. For married couples filing jointly, the phase-out starts at $400,000 of modified adjusted gross income, while for all other filers, it begins at $200,000. The credit reduces by $50 for each $1,000 of income above these thresholds until completely eliminated.

The Child Tax Credit is calculated on Schedule 8812 (Credits for Qualifying Children and Other Dependents), which also covers the Additional Child Tax Credit and Credit for Other Dependents. The refundable portion (Additional Child Tax Credit) allows lower-income families to benefit from the credit even when they owe little or no federal income tax, based on earned income calculations.

Parents should carefully track qualifying children’s ages, as children turning 17 during the tax year no longer qualify for the CTC but may qualify for the $500 Credit for Other Dependents instead. Divorced or separated parents should understand that only the parent claiming the child as a dependent can claim the Child Tax Credit for that child.