Child Tax Credit for 2024 - 2025
The Child Tax Credit is worth up to $2,000 per qualifying child for the 2024 tax year, and part of it may be refundable. However, in order to claim the credit, your child must satisfy age, residency, citizenship, and other requirements. The credit amount is also reduced if your income is above a certain amount.
Key Takeaways
- The Child Tax Credit can be worth up to $2,000 per qualifying child for the 2024 tax year. However, the maximum credit can be reduced if your modified adjusted gross income is above a certain amount.
- To claim the Child Tax Credit, you must have at least one qualifying child. In addition, you (and your spouse if filing a joint return) must have a Social Security number or ITIN, and can’t be claimed as a dependent on someone else’s tax return.
- To be a “qualifying child,” your child must be 16 or younger at the end of the year, have a Social Security number, live with you for more than half of the tax year, and satisfy several other requirements.
- The Child Tax Credit is a partially refundable credit. The refundable portion – which is known as the Additional Child Tax Credit – can’t be more than $1,700 per qualifying child for the 2024 tax year.
What is the Child Tax Credit?
From diapers and formula when they’re babies to braces and car insurance when they’re teenagers, parents fork out a lot of money for their children every year. Fortunately, Uncle Sam provides a valuable tax break that can help offset some of these costs – it’s called the Child Tax Credit.
The Child Tax Credit is a federal income tax credit available to certain families with children. For the 2024 tax year, it’s worth up to $2,000 for each qualifying child. However, that amount can be reduced – potentially to $0 – if your modified adjusted gross income for the year is too high.
The credit is also partially refundable. This basically means it can trigger a tax refund if the credit amount is greater than the tax you owe before applying the credit. But the refundable amount – known as the Additional Child Tax Credit – may be limited.
If you have children, you’ll certainly want to claim the Child Tax Credit on your 2024 tax return if you can. But to take full advantage of this valuable tax break, you need to be familiar with the eligibility requirements, how the credit is calculated, how to claim the credit, and more. So, let’s take a closer look at the 2024 Child Tax Credit so you can get all the tax savings you’re entitled to from this federal tax credit.
Who can claim the Child Tax Credit?
To claim the Child Tax Credit, first and foremost, you must have at least one “qualifying child” (more on this in a minute).
In addition, you (or your spouse if you’re filing a joint return) must have a Social Security number or Individual Taxpayer Identification Number (ITIN) issued by the date your federal income tax return is due (including any tax filing extensions). You can meet this requirement if you apply for an ITIN by the deadline and the IRS actually issues one to you.
Finally, you generally can’t claim the Child Tax Credit if you (or your spouse if you’re filing jointly) can be claimed as a dependent on someone else's tax return. However, you can still claim the credit if the person who could claim you as a dependent on their return either:
- isn’t required to file a return, and actually doesn’t file
- files a return only to get a refund for withheld income taxes or estimated taxes paid for the tax year, and doesn’t claim you as a dependent
If you file using TurboTax, you’ll be asked simple questions to determine if you meet the requirements for this tax credit when completing your tax return.
What is a “qualifying child” for purposes of the Child Tax Credit?
As noted earlier, you can only claim the Child Tax Credit if you have a “qualifying child.” To qualify, a child generally has to pass the following eight tests:
1. Age test. Your child has to be 16 or younger at the end of the tax year to qualify for the Child Tax Credit. Since it’s the child’s age on December 31 that matters, a kid that turns 17 or older at any time during the year isn’t a qualifying child for purposes of the credit.
On the other hand, a child that’s born (or adopted) at any time during the tax year – even if it’s at 11:59 p.m. on December 31 – can be a qualifying child for the year if all the other tests are met.
2. Relationship test. A child generally has to be either your:
- biological child
- stepchild
- adopted child
- foster child
- sibling (including a stepbrother, stepsister, half-brother, or half-sister)
However, a qualifying child can also be a descendant of one of the above (such as a grandchild, niece, or nephew).
3. Dependency test. The child must be claimed as a dependent on your tax return to be a qualifying child. Simply being able to claim the child as a dependent isn’t enough – you must actually do it.
If a child’s parents are divorced or separated, the custodial parent is usually the one who claims the child as a dependent. However, the non-custodial parent can claim the child as a dependent in certain cases (see below for more information).
4. Financial support test. A qualifying child can’t provide more than half of their own financial support for the tax year.
Temporary Assistance to Needy Families (TANF) payments or similar assistance used to support a child don’t count when determining if the child provided more than half of their own support. The same is true for money you receive from the government or a placement agency for a foster child’s support.
On the other hand, if a child receives Social Security benefits and uses them toward their own support, the benefits are treated as if they’re provided by the child.
5. Residency test. A child generally has to live with you for more than half of the tax year to be a qualifying child for Child Tax Credit purposes. However, there are a few exceptions to this requirement that apply in certain situations.
For example, temporary absences – such as for school, vacation, medical care, or detention in a juvenile facility – count as time lived with you.
If a child is born or dies during the tax year, the residency test is satisfied if the child lives in your home for more than half the time they were alive that year. If a child had to stay in the hospital following birth, the time spent in the hospital is also treated as time living in your home.
Likewise, an adopted or foster child passes the residency test if they’re adopted or placed with you during the tax year, and they lived in your home for more than half the time since they were adopted or placed with you.
An exception to the residency test may also apply if your child is kidnapped by someone who isn’t a family member.
In addition, when a child’s parents are divorced or separated, special rules may allow the non-custodial parent to claim the Child Tax Credit in certain situations (these rules are discussed below).
6. Joint return test. A child that is married and files a joint return generally isn’t a qualifying child. However, a child can still qualify if they file a joint return if it’s only filed to claim a refund for withheld taxes or estimated tax payments.
7. Citizenship test. A child generally has to be a U.S. citizen, U.S. national, or U.S. resident alien to be a qualifying child for purposes of the Child Tax Credit. However, if you’re a U.S. citizen or U.S. national and your adopted child lived with you all year as a member of your household, the child is treated as a U.S. citizen.
According to the IRS, a U.S. national is someone who isn’t a U.S. citizen but owes allegiance to the U.S. This includes American Samoans and Northern Mariana Islanders who chose to become U.S. nationals instead of U.S. citizens.
A U.S. resident alien is generally someone who has a green card or has been physically present in the U.S. for a certain period of time.
8. Social Security test. A qualifying child for Child Tax Credit purposes must have a Social Security number that’s valid for employment and issued before the due date of your tax return (including extensions).
If a child died before receiving a Social Security number, you can still claim the Child Tax Credit for the child. However, you’ll have to provide the IRS with a copy of the child's birth certificate, death certificate, or hospital records to show that the child was born alive.
How much is the Child Tax Credit?
To calculate your Child Tax Credit, first determine your base amount by multiplying the number of qualifying children you have by $2,000. So, for example, if you have three qualifying children, your base amount is $6,000 ($3 x $2,000 = $6,000).
The next step is to determine your modified adjusted gross income (MAGI). For purposes of the Child Tax Credit, your MAGI is equal to the adjusted gross income (AGI) reported on your tax return, plus any amount claimed as a:
- foreign earned income exclusion
- foreign housing deduction or exclusion
- exclusion of income from Puerto Rico or American Samoa
If your MAGI is $200,000 or less ($400,000 or less for joint filers), then you don’t have to do anything else. Your credit is equal to the base amount ($2,000 per qualifying child).
However, if your MAGI exceeds the $200,000 (or $400,000) threshold, you must reduce the base amount by $50 for each $1,000 that your MAGI is over the threshold. If your MAGI exceeds the threshold by an amount that isn’t a multiple of $1,000, then round up to the nearest $1,000. For example, if the excess amount is $2,400, then round up to $3,000 for purposes of calculating the reduction. Depending on the number of qualifying children you have, this phase-out requirement could drop your credit down to $0.
To show how the credit phase-out works, suppose you and your spouse have four qualifying children, you’re filing a joint return, and your MAGI is $412,500. The base amount for four qualifying children is $8,000 (4 x $2,000 = $8,000). However, your MAGI is $12,500 over the phase-out threshold for joint filers ($412,500 - $400,000 = $12,500). Since the excess amount isn’t a multiple of $1,000, round it up to $13,000. In this case, the $8,000 base amount must be reduced by $650 ($50 x 13 = $650), leaving you with a total Child Tax Credit of $7,350.
Can you claim the Additional Child Tax Credit?
As noted earlier, part of the Child Tax Credit is refundable. The IRS calls the refundable portion the Additional Child Tax Credit. Depending on your tax situation, the Additional Child Tax Credit can generate a tax refund (or a bigger refund), while the Child Tax Credit’s nonrefundable part can at best reduce your tax bill to $0.
However, the Additional Child Tax Credit comes with a few limits and restrictions. For example:
- You can only claim the Additional Child Tax Credit if the total Child Tax Credit (as calculated using the instructions above) is greater than your pre-credit tax liability.
- The Additional Child Tax Credit is capped at $1,700 per qualifying child for the 2024 tax year (it will stay at this amount for 2025). So, for example, if you have two qualifying children, the refundable portion of the Child Tax Credit can’t be more than $3,400 (2 x $1,700 = $3,400).
- You need at least $2,500 of earned income for the tax year to claim the Additional Child Tax Credit. Earned income generally includes wages, salary, tips, earnings from self-employment, and other compensation received for work.
- The Additional Child Tax Credit generally can’t be more than 15% of your earned income above $2,500. For example, if you have $50,000 of earned income, the refundable portion of the Child Tax Credit can’t be more than $7,125 (($50,000 - $2,500) x 0.15 = $7,125). However, this limit can be increased for certain people with three or more qualifying children.
- You can’t claim the Additional Child Tax Credit if you file Form 2555, which is used to claim the foreign earned income exclusion, foreign housing deduction, and foreign housing exclusion.
TurboTax Tip:
If you file your tax return early and claim the Additional Child Tax Credit, the IRS is required by law to hold your tax refund (if any) until at least mid-February.
Who can claim the Child Tax Credit if the parents are divorced or separated?
When a qualifying child’s parents are divorced or separated, the custodial parent typically claims the Child Tax Credit. In most cases, the custodial parent is the parent with whom the child lived the majority of nights during the tax year. The other parent is the noncustodial parent.
However, under certain conditions, the noncustodial parent may be able to claim the Child Tax Credit. The first requirement is that the parents either:
- are divorced or legally separated under a decree of divorce or separate maintenance
- are separated under a written separation agreement
- lived apart at all times during the last six months of the tax year (whether or not they are or were married)
The parents also had to provide over half of the child’s support for the tax year. Support provided by a parent's spouse is treated as provided by the parent.
In addition, the child had to be in the custody of one or both parents for more than half of the tax year.
Finally, the custodial parent generally must sign Form 8332 (or a similar statement) indicating that they won't claim the child as a dependent for the tax year. The noncustodial parent also has to include a copy of the form or statement with their tax return. If the divorce decree or separation agreement went into effect before 2009, the noncustodial parent may be able to include certain pages from the decree or agreement instead of Form 8332.
What if a child is a “qualifying child” for more than one person?
What if a child’s parents were never married, and they all live together in the same home? Or suppose a child lives with both a parent and a grandparent. In these cases, more than one person might be able to claim the child as a “qualifying child” for Child Tax Credit purposes.
However, the Child Tax Credit for a single child can only be claimed on one tax return for the year. So, where a child can be a qualifying child for two or more people, the IRS uses the following tie-breaker rules to determine which eligible person can claim the credit for the child:
- If only one eligible person is the child's parent, that parent can claim the credit.
- If the parents file a joint return, both parents can claim the credit on the joint return.
- If the parents file separate returns, the parent with whom the child lived with longer during the tax year can claim the credit.
- If the parents file separate returns, and the child lived with each parent for the same amount of time during the tax year, the parent with the highest AGI for the year can claim the credit.
- If no parent can claim the child as a qualifying child, the eligible person with the highest AGI for the year can claim the credit.
- If a parent can claim the child as a qualifying child, but no parent actually does so on their return, the eligible person with the highest AGI for the year can claim the credit if that person's AGI is higher than the AGI of any parent who can claim the child.
For purposes of these tie-breakers, a “parent” is only a biological or adoptive parent – not a stepparent or foster parent unless that person has adopted the child.
How do you claim the Child Tax Credit?
Use Schedule 8812 (Form 1040) to calculate the Child Tax Credit. Both the nonrefundable and the refundable portion are then reported on Form 1040 (although on different lines). When you list your dependents on Form 1040, check the “Child Tax Credit” box for each dependent that’s a qualifying child.
If you claim the Child Tax Credit by mistake, and the IRS later determines that your error was due to “reckless or intentional disregard” of the credit rules, you won’t be able to claim the credit for two years. If it’s determined that your error was due to fraud, you won’t be allowed to claim the credit for 10 years. You might also have to pay a penalty to the IRS.
In addition, if the IRS denies or reduces your Child Tax Credit for any reason other than a math or clerical error, you generally have to file Form 8862 with your tax return to claim the credit for a later tax year.
Can you claim the Credit for Other Dependents?
If you can’t claim the Child Tax Credit for a dependent, you still might be able to claim the Credit for Other Dependents. If all the requirements are met, this credit can be claimed for dependents of any age, including elderly parents that you support. However, you can’t claim the credit for anyone who is your qualifying child for Child Tax Credit purposes.
The Credit for Other Dependents is worth up to $500 for each qualifying dependent. However, as with the Child Tax Credit, it’s gradually phased out if your MAGI is greater than $200,000 ($400,000 for joint filers).
Use Schedule 8812 to calculate the Credit for Other Dependents (that’s the same form used to calculate the Child Tax Credit). The credit amount is then reported on Form 1040 along with the nonrefundable portion of the Child Tax Credit (if any).
Is the Child Tax Credit going to change soon?
The Tax Cuts and Jobs Act (TCJA) of 2017 made some significant changes to the Child Tax Credit. It also created the Credit for Other Dependents. However, the changes and the new credit are only temporary – they’re currently scheduled to expire after the 2025 tax year.
Congress may extend all or some of the TCJA provisions before they go away. But if the changes to the Child Tax Credit aren’t extended, the following revisions will automatically take effect for the credit beginning with the 2026 tax year:
- The base amount will drop from $2,000 to $1,000 per qualifying child.
- The phase-out thresholds will decrease from the current $200,000 or $400,000 amounts to $110,000 for joint filers, $75,000 for taxpayers who aren’t married, and $55,000 for married taxpayers filing a separate return.
- The per-qualifying child cap for the Additional Child Tax Credit ($1,700 per qualifying child for the 2024 tax year) will no longer apply.
- The earned income minimum for the Additional Child Tax Credit will increase from $2,500 to $3,000.
The Credit for Other Dependents will also be repealed if it isn’t extended.
A qualified tax professional can help you to stay on top of any changes that might impact your taxes. TurboTax Live Full Service can connect you with a tax expert near you at any time.
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