The child tax credit is a federal tax benefit that plays an important role in providing financial support for American taxpayers with children. People with kids under the age of 17 may be eligible to claim a tax credit of up to $2,000 per qualifying dependent. For 2023, $1,600 of the credit is potentially refundable.
We’ll cover who qualifies, how to claim it and how much you might receive per child.
What is the child tax credit?
The child tax credit (CTC) is a nonrefundable tax credit available to taxpayers with dependent children under the age of 17. The credit can reduce your tax bill on a dollar-for-dollar basis, potentially eliminating your tax bill altogether. Some taxpayers may also be eligible for a partial refund of the credit through what’s called the “additional child tax credit” (ACTC).
To qualify, taxpayers and their children must meet certain eligibility criteria that take into account the child’s age, as well as their relationship to the person claiming them.
Taxpayers must also meet income thresholds to take full advantage of the benefit because the credit phases out for high earners. Once your modified adjusted gross income exceeds the income limit, the credit amount you get may be smaller, or you may be deemed ineligible.
How much is the 2023 child tax credit?
Child tax credit 2023 (taxes filed in 2024)
For 2023, the child tax credit is worth $2,000 per qualifying dependent child if your modified adjusted gross income is $400,000 or below (married filing jointly) or $200,000 or below (all other filers). The refundable portion, also known as the additional child tax credit, is worth up to $1,600.
If your MAGI exceeds the above limits, your credit gets reduced by $50 for each $1,000 that your income exceeds the threshold.
Child tax credit 2024
If you’re curious about how this tax benefit will change in future years, it’s possible to take a look ahead. For the 2024 tax year (tax returns filed in 2025), the child tax credit will be worth $2,000 per qualifying child, with $1,700 being potentially refundable through the additional child tax credit.
Requirements: Who qualifies for the child tax credit?
Taxpayers can claim the child tax credit for the 2023 tax year when they file their tax returns in 2024. Generally, there are seven “tests” you and your qualifying child need to pass.
Age: Your child must have been under the age of 17 at the end of 2023.
Relationship: The child you’re claiming must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister or a descendant of any of those people (e.g., a grandchild, niece or nephew).
Dependent status: You must be able to properly claim the child as a dependent. The child also cannot file a joint tax return, unless they file it to claim a refund of withheld income taxes or estimated taxes paid.
Residency: The child you’re claiming must have lived with you for at least half the year (there are some exceptions to this rule).
Financial support: You must have provided at least half of the child’s support during the last year. In other words, if your qualified child financially supported themselves for more than six months, they’re likely considered not qualified.
Citizenship: Per the IRS, your child must be a “U.S. citizen, U.S. national or U.S. resident alien,” and must hold a valid Social Security number.
Income: Parents or caregivers claiming the credit also typically can’t exceed certain income requirements. Depending on how much your income exceeds that threshold, the credit gets incrementally reduced until it is eliminated.
https://www.nerdwallet.com/article/taxes/qualify-child-child-care-tax-credit
