2024-2025 Child Tax Credit: Top 7 Requirements
The Child Tax Credit can significantly reduce your tax bill if you meet all seven requirements: 1. age, 2. relationship, 3. support, 4. dependent status, 5. citizenship, 6. length of residency and 7. family income. You and/or your child must pass all seven to claim this tax credit.
Key Takeaways
- There are seven qualifying tests to determine eligibility for the Child Tax Credit: age, relationship, support, dependent status, citizenship, length of residency and family income.
- If you aren't able to claim the Child Tax Credit for a dependent, they might be eligible for the Credit for Other Dependent.
- The American Rescue Plan Act temporarily directed the IRS to issue advance payments of the 2021 Child Tax Credit during the 2021 year rather than having families wait until they prepare their 2021 taxes in 2022.
- The temporary changes for 2021 increased the eligibility and credit amount for certain families and made it so the entire Child Tax Credit could be received as a refund for 2021, even if they owe no federal income tax.
Child Tax Credit in 2024, 2023, 2022, 2020, and earlier tax years
Before we discuss how to claim the Child Tax Credit, you need to understand what is meant when we talk about a "tax year." The "2024 tax year" refers to the income you earn and the taxes you'll file for the calendar year 2024, which are typically filed by April 2025.
To claim the Child Tax Credit for 2024, 2023, 2022, 2020, and earlier tax years, you must determine if your child is eligible. All of these seven qualifying tests have to be met:
1) Age test - For these tax years, a child must have been under age 17 (i.e., 16 years old or younger) at the end of the tax year for which you claim the credit.
2) Relationship test - The child must be your own child, a stepchild, or a foster child placed with you by a court or authorized agency. An adopted child is always treated as your own child. ("An adopted child" includes a child lawfully placed with you for legal adoption, even if that adoption is not final by the end of the tax year.) You can also claim your brother or sister, stepbrother or stepsister. And you can claim descendants of any of these qualifying people—such as your nieces, nephews and grandchildren—if they meet all the other tests.
3) Support test - To qualify, the child cannot have provided more than half of his or her own financial support during the tax year.
4) Dependent test - You must claim the child as a dependent on your tax return. Bear in mind that in order for you to claim a child as a dependent, your child has to:
- be your child (or adoptive or foster child), sibling, niece, nephew or grandchild;
- be under age 19, or under age 24 and a full-time student for at least five months of the year; or be permanently disabled, regardless of age;
- have lived with you for more than half the year; and
- have provided no more than half of their own support for the year.
5) Citizenship test - The child must be a U.S. citizen, a U.S. national or a U.S. resident alien. (For tax purposes, the term "U.S. national" refers to individuals who were born in American Samoa or in the Commonwealth of the Northern Mariana Islands.)
6) Residence test - The child must have lived with you for more than half of the tax year for which you claim the credit. There are important exceptions, however:
- A child who was born (or died) during the tax year is considered to have lived with you for the entire year.
- Temporary absences by you or the child for special circumstances, such as school, vacation, business, medical care, military services or detention in a juvenile facility, are counted as time the child lived with you.
- There are also some exceptions to the residency test for children of divorced or separated parents. For details, see the instructions for Form 1040.
7) Family income test - The Child Tax Credit is reduced if your modified adjusted gross income (MAGI) is above certain amounts, which are determined by your tax-filing status:
- For tax years 2024, 2023, 2022 and 2018 through 2020, the phaseout of the credit begins with $200,000 in income ($400,000 for married filing jointly).
- In 2017, the phase out threshold is $55,000 for Married Filing Separately couples; $75,000 for Single, Head of Household, and Qualifying Surviving Spouse filers; and $110,000 for Married Filing Jointly couples. For each $1,000 of income above the threshold, the available Child Tax Credit was reduced by $50.
How can you double-check that you qualify for the Child Tax Credit?
If anything about the above is unclear, or you still have some questions, getting assistance from a tax expert can help you determine whether you qualify.
TurboTax Tip:
If you have a dependent that doesn't meet the requirements of the Child Tax Credit, you might be able to claim them as a dependent and qualify for the Other Dependent Tax Credit.
What if the credit exceeds my tax liability?
For 2024, 2023, 2022, 2020, and earlier tax years, the Child Tax Credit is nonrefundable; if your credit exceeds your tax liability, your tax bill is reduced to zero, and any remaining unused credit is lost. However, you may be able to claim a refundable Additional Child Tax Credit for the unused balance.
- Up to $1,700 per qualifying child in 2024 and 2023 is refundable with the Additional Child Tax Credit.
- You can find out if you're eligible for this refundable credit by completing the worksheet in IRS Form 8812.
2021 Child Tax Credit
The American Rescue Plan Act of March 2021 is designed to assist in the United States’ recovery from the economic impact of the COVID-19 pandemic. A significant part of the plan includes the broadening of the Child Tax Credit to include more families, increase the financial benefits the credit provides, and to get these benefits into the hands of the eligible taxpayers quickly through the use of Advanced Monthly Payments in 2021.
Advance Child Tax Credit Payments
The expanded and newly-advanceable Child Tax Credit for 2021 was authorized by the American Rescue Plan Act, enacted in March of 2021. Part of this expansion is to advance a portion of the 2021 tax credit to families by sending them direct payments during 2021 rather than having them wait until they prepare their 2021 taxes in 2022.
Most families do not need to do anything to get their advance payment. Normally, the IRS will calculate the payment amount based on your 2020 tax return. Eligible families will receive advance payments, either by direct deposit or check.
These payments are an advance of your 2021 Child Tax Credit. The amount that you receive will be reconciled to the amount that you are eligible for when you prepare your 2021 tax return in 2022. Most families will receive about one-half of their tax credit through the advance payments. If you receive too little, you will be due an additional amount on your tax return. In the unlikely event that you receive too much, you might have to pay the excess back, depending on your income level.
How has the Child Tax Credit changed over the years?
The American Rescue Plan raised the maximum Child Tax Credit in 2021 to $3,600 per child for qualifying children under the age of 6 and to $3,000 per child for qualifying children ages 6 through 17. Before 2021, the credit was worth up to $2,000 per eligible child, and children 17 years and older were not eligible for the credit.
The Child Tax Credit changes for 2021 have lower income limits than the original Child Tax Credit. Families that do not qualify for the credit using these lower income limits are still eligible for the $2,000 per child credit using the original Child Tax Credit income and phase out amounts.
In addition, the entire credit is fully refundable for 2021. This means that eligible families can get it as a refund if they don't owe any federal income tax.
Before 2021, the refundable portion was limited to $1,400 per child and there were other requirements regarding earned income to obtain the refundable portion. There is not an earned income requirement for 2021.
As in other years, to claim the Child Tax Credit, you need to determine if your child is eligible. The same seven qualifying tests listed above for other years - age, relationship, support, dependent status, citizenship, length of residency and family income - are also required for 2021. However, the age and family income tests were changed to make more families eligible for more of the credit than in other years.
Age test changes for 2021 include such that a child needs to have been under age 18 at the end of the year. Increased credit amounts are available for children under age 6 if certain family income tests are met.
Income limitation changes for the 2021 Child Tax Credit include a credit reduction if your 2021 modified adjusted gross income (MAGI) is above certain amounts, which are determined by your tax-filing status.
- Qualifying families with incomes less than $75,000 for Single, $112,500 for Head of Household, or $150,000 for Married Filing Jointly returns are eligible for the temporarily increased credit of $3,600 for children under 6 and $3,000 for children under 18. Above these income amounts, the credit is reduced by $50 for each $1,000 over these limits.
- For families with MAGI greater than the amounts eligible for the increased credit, the phaseout of the credit begins with $200,000 in income ($400,000 for married filing jointly) and the credit amount is $2,000 for all children under 18 at the end of the tax year.
- Your greatest available credit is based on the above method that provides you with the largest benefit.
Additionally, for 2021, the Child Tax Credit is fully refundable; if your credit exceeds your tax liability, your tax bill is reduced to zero and any remaining unused credit can be provided to you as a refund.
For updates and more information, please visit our 2021 Child Tax Credit blog post.
What is the Other Dependent Tax Credit?
If you have a dependent that doesn't meet the requirements of the Child Tax Credit, you might be able to claim them as a dependent and qualify for the Other Dependent Tax Credit.
The Other Dependent Tax Credit is an alternative credit that can be claimed for dependents who meet the following conditions:
- The dependent is a U.S. citizen, U.S. national, or U.S. resident alien.
- The dependent can’t be claimed on the Child Tax Credit or Additional Child Tax Credit .
- The dependent will be claimed on your tax return.
- The dependent has a Social Security number or Individual Tax Identification Number (ITIN).
One thing to note for this credit is that dependents can be any age. The maximum for this credit is $500 per dependent.
When will I get my tax refund with the credit?
Typically, it takes 21 days or less for the IRS to issue a refund for taxpayers who filed electronically and chose to receive their refund via direct deposit.
However, if your return requires additional review due to errors or omissions, it could take longer to process. Returns with a claim for an Additional Child Tax Credit may also be delayed.
To check the status of your refund, you can use our tool to track your refund.
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