What Is the Child Tax Credit and How to Claim It?

Tax credits allow you to save money by deducting some dollars from the tax you owe. One of these is the Child Tax Credit (CTC), which allows families with young children to save some money.

So what is the Child Tax Credit? Who qualifies for it and how to claim it? Read on to learn more about the Child Tax Credit and how you can claim it if you have children in your household. 

What Is the Child Tax Credit?

The Child Tax Credit is a type of tax benefit offered by the U.S. government to people with children under the age of 17. 

If you earn $200,000 as an individual filer or $400,000 as a joint filer, you can qualify for the entire amount of $2,000 for each child for taxes filed in 2025 for 2024.

The tax credit will be reduced by $50 for each $1,000 of income if your monthly income exceeds the above-mentioned income threshold.

Who Qualifies for the Child Tax Credit?

You can claim your Child Tax Credit when filing your annual tax returns. To qualify for CTC, you and your child will need to pass the following seven eligibility criteria according to the IRS:

1. Your child should be under the age of 17 when that tax year ends. 
2. The child you’re claiming the tax credit for should be your daughter, son, foster child, stepchild, sister, brother, half-sister, half-brother, stepsister, stepbrother, or grandchild or nephew/niece of any of those.
3. You should be able to legally declare them as a dependent.
4. You must have financially borne at least half of the child’s expenses in the last year.
5. The child should have lived with you for a minimum of 6 months.
6. Your income must fall into a certain threshold to claim the tax credit. It should be less than or equal to $200,000 ($400,000 if you’re filing a joint tax return).
7. The child must be a U.S. national, a U.S. citizen, or a U.S. resident alien with a valid Social Security number. 

How to Claim Child Tax Credit?

People with low income often avoid filing taxes as they don’t usually owe them. However, this can keep them from availing some really valuable tax benefits that they may be eligible for. 

For instance, if you have a family, you may be eligible for the Child Tax Credit. The CTC is partially refundable if you get the Additional Child Tax Credit. So even if you don’t owe any taxes, you will get a partial refund.

You can claim the Child Tax Credit by filing Form 1040 for Income Tax Return. They must also attach Schedule 8812 which helps determine the amount of Child Tax Credit they can receive. 

What Is the Additional Child Tax Credit?

If you don’t owe any taxes but do qualify for the Child Tax Credit, you can claim the Additional Child Tax Credit (ACTC) to get a partial refund. For 2023 (taxes filed in 2024), the ACTC will be $1,700.

Your Additional Child Tax Credit is calculated by the IRS by multiplying your earned income by 15%. You can claim the smaller amount between what you were eligible for but didn’t use and the CTC credit. However, if you have three or more dependent children, the calculations can be more complicated. 

In order to claim the ACTC, you will need to fill out Form 1040 and also attach Schedule 8812 with it. However, there are also some additional criteria to claim the ACTC:

• You must have a minimum earned income* of $2,500 or three or more dependents.
• You or your joint filing partner should not exclude any income earned from foreign sources in Form 2555 or Form 2555-EZ.

*Earned income refers to any income earned from self-employment or job. It does not include income from passive sources such as unemployment, welfare, pensions, or dividends.

Conclusion

For the 2023 tax year (filed in 2024), the Child Tax Credit for taxpayers as determined by the IRS is $2,000 for each dependent/child. Taxpayers who do not owe any taxes can claim the Additional Child Tax Credit (ACTC), which is partially refundable.

We hope this guide helped you determine whether you qualify for the Child Tax Credit and how you can claim it.

Good luck!