What the Child Tax Credit is and who can claim it

The Child Tax Credit is a tax reduction that the federal government offers to people who support children. When you claim it on your tax return, it lowers the amount of tax you owe — or increases your refund if you are owed one. The credit is worth up to $2,000 per child under age 17, though the exact amount depends on your income and filing status.

You can claim the credit if you are the parent, legal guardian, or relative who provides more than half of a child's financial support during the year. The child must be a U.S. citizen, national, or resident alien, and you must have a valid Social Security number for them. The child's relationship to you — whether biological child, stepchild, adopted child, or may have access to relative — does not change whether you can claim the credit, as long as you meet the support requirement.

Your income determines whether you can claim the full credit, a reduced amount, or no credit at all. The income thresholds vary by filing status: for single filers, the credit begins to reduce at $200,000 of modified adjusted gross income; for married couples filing jointly, it begins at $400,000. If your income exceeds these amounts, the credit decreases by $50 for every $1,000 (or fraction thereof) over the threshold.

Key Takeaways

  • The Child Tax Credit reduces your federal tax bill by up to $2,000 per may have access to child under age 17.
  • You must provide more than half the child's financial support during the year and have a valid Social Security number for each child you claim.
  • The credit phases out at higher income levels: $200,000 for single filers and $400,000 for married couples filing jointly.
  • You report the credit on your tax return using Form 1040 and Schedule 8812, and the IRS matches it against the Social Security numbers you provide.

Income limits and how the credit reduces at higher earnings

The Child Tax Credit is available to most households, but the amount shrinks as your income rises. The IRS uses your modified adjusted gross income (MAGI) to determine where you fall. For most people, MAGI is the same as your adjusted gross income reported on Form 1040.

Once your income exceeds the threshold for your filing status, the credit decreases by $50 for every $1,000 of income over that amount. This means if you are a single filer earning $210,000, you are $10,000 over the $200,000 threshold. The credit would reduce by $500 (ten increments of $50 each). If you normally may have access to for the full $2,000 credit per child, you would receive $1,500 instead.

The reduction applies to each child separately, so a family with three children could lose up to $6,000 in total credits if income is high enough. However, the credit does not disappear entirely for most households — it only reduces. Only at very high income levels does the credit reach zero.

How to claim the credit on your tax return

You claim the Child Tax Credit by filing a federal tax return, even if you normally would not have to file. You report the credit on Form 1040 (the main individual income tax form) and provide details on Schedule 8812 if you have more than one may have access to child or if your income is above certain thresholds.

On Schedule 8812, you list each child's name, date of birth, Social Security number, and relationship to you. The IRS uses this information to verify that the child exists and that you are the person claiming them. You cannot claim the same child on two different tax returns — only one person per child per year can claim the credit.

If you file electronically, tax software typically walks you through the questions about your children and calculates the credit automatically. If you file by paper, you fill in the required fields on the form and attach Schedule 8812 to your return. The IRS processes your return and either reduces your tax bill or increases your refund by the credit amount.

The difference between refundable and non-refundable portions

Part of the Child Tax Credit is refundable, meaning you can receive money back even if you owe no tax. The refundable portion is called the Additional Child Tax Credit or Refundable Child Tax Credit, and it is worth up to $1,700 per child (this amount can change year to year). The remaining $300 per child is non-refundable, meaning it can only reduce your tax bill to zero but cannot create a refund.

Here is how this works in practice: suppose you have one child and owe $800 in federal tax. The full Child Tax Credit is $2,000. Your $800 tax bill is eliminated, leaving $1,200 of unused credit. Of that $1,200, up to $1,700 of the refundable portion can be returned to you as a refund. In this case, you would receive a $1,200 refund. If the refundable portion for that year were lower, you might receive less.

The refundable amount depends on your earned income (wages, self-employment income, and certain other sources). If your earned income is very low, the refundable portion may be limited. The IRS calculates this on your return and determines the final refundable amount automatically.

Special rules for divorced or separated parents

When parents are divorced, separated, or never married, only one of them can claim the Child Tax Credit for each child in a given year. The parent who has custody of the child for the greater part of the year is usually the one who can claim it — this is called the custodial parent.

The custodial parent can allow the non-custodial parent to claim the credit instead, but this must be done by signing Form 8332 (Declaration of Allocation of Certain Dependent Benefits). The non-custodial parent then attaches the signed form to their tax return. Without this form, the IRS will reject the non-custodial parent's claim to the credit.

Custody is determined by where the child lives for the majority of the year. If the child spends equal time with both parents, the parent with the higher adjusted gross income is treated as the custodial parent unless the parents have a written agreement stating otherwise. These rules explore even if both parents provide financial support.

What happens if you claim a child who is also claimed by someone else

If two people claim the same child on their tax returns, the IRS will catch the duplicate claim because both returns will list the same Social Security number. When this happens, the IRS typically allows the claim from the person with the higher adjusted gross income, and the other person's claim is rejected.

If you receive a refund based on a Child Tax Credit claim that is later disallowed, the IRS will send you a notice asking you to repay the refund. You have the right to respond to this notice and provide documentation showing that you were the correct person to claim the child. If you and another person genuinely disagree about who should claim the child, you may need to provide custody documents or a divorce decree to resolve the dispute.

To avoid this problem, make sure you and any other potential claimants (such as an ex-spouse or grandparent) agree in advance about who will claim each child. If you are unsure whether you have the right to claim a particular child, contact the IRS or speak with a tax professional before filing.

How the credit changed in recent years

The Child Tax Credit has been modified several times. In 2017, the Tax Cuts and Jobs Act increased the credit from $1,000 to $2,000 per child and raised the income thresholds at which it begins to phase out. In 2021, the American Rescue Plan temporarily increased the refundable portion and allowed the credit to be paid monthly to certain households, rather than only when filing a tax return.

These temporary changes expired at the end of 2021, and the credit returned to the $2,000 per child amount with the 2017 income thresholds. The refundable portion went back to $1,700 per child. Future changes to the credit are possible, so it is worth checking the IRS website or a tax professional's guidance each year to confirm the current rules.

Frequently Asked Questions

Can I claim the Child Tax Credit if the child does not live with me?

No, the child must live with you for more than half the year. If the child lives primarily with someone else, that person is the custodial parent and can claim the credit. The only exception is if the custodial parent signs Form 8332 releasing the credit to you.

What if I do not have a Social Security number for my child?

You cannot claim the Child Tax Credit without a valid Social Security number for each child. If your child does not have one, you can request one from the Social Security Administration. You will need the child's birth certificate and proof of citizenship or residency. Without the number, the IRS will reject your claim.

Do I have to file a tax return to get the Child Tax Credit?

If your income is below the filing requirement for your age and status, you are not required to file. However, you will not receive the refundable portion of the credit unless you file a return. Filing allows you to claim the full credit and potentially receive a refund.

Can I claim the credit for a stepchild or grandchild?

Yes, if you provide more than half the child's financial support during the year and the child lives with you for more than half the year. The child must be a U.S. citizen, national, or resident alien. Stepchildren and grandchildren count as may have access to relatives for this purpose.

What if my income changes after I file my return?

If your income changes, you may need to file an amended return using Form 1040-X. If your income was lower than you reported, you might be owed a larger credit. If it was higher, you might owe back part of the credit. The IRS will calculate the correct amount based on your actual income for the year.