The Child Tax Credit (CTC) is a federal tax credit that reduces the income tax owed by families with qualifying children. A credit is more valuable than a deduction: it reduces your tax bill dollar for dollar rather than reducing the income that is taxed. Part of the credit is refundable through the Additional Child Tax Credit, which means some families can receive money back even if they owe little or no federal income tax.
Who counts as a qualifying child
The IRS applies a set of tests. Broadly, the child must be under the age limit at the end of the tax year, be your son, daughter, stepchild, foster child, sibling, step-sibling or a descendant of any of them, have lived with you for more than half the year, not have provided more than half of their own support, be claimed as a dependent on your return, and be a US citizen, US national or US resident alien with a Social Security number valid for employment. The precise tests and the age limit are set out on irs.gov.
How income affects the credit
The full credit is available up to a modified adjusted gross income threshold, above which it is reduced gradually. The thresholds differ for single filers, heads of household and married couples filing jointly. Both the credit amount and the thresholds have changed more than once in recent years, so check the figures for the tax year you are filing rather than assuming last year's numbers still apply.
The refundable portion
If the Child Tax Credit reduces your tax to zero and there is credit left over, you may be able to receive part of the remainder as a refund through the Additional Child Tax Credit. The refundable amount is capped and is calculated from your earned income above a set floor. This is why families with very low earned income sometimes receive less than the headline credit amount. The IRS is also required to hold refunds on returns claiming the Additional Child Tax Credit until mid-February each year.
The Credit for Other Dependents
If a dependent does not meet the Child Tax Credit tests — for example an older teenager above the age limit, a dependent parent, or a child with an ITIN rather than a Social Security number — you may still qualify for the smaller, non-refundable Credit for Other Dependents. It is claimed on the same part of the return.
Credits that often apply alongside it
- Earned Income Tax Credit (EITC): a refundable credit for working people with low to moderate income, worth substantially more to families with children. Many eligible households never claim it.
- Child and Dependent Care Credit: for work-related childcare or care for a disabled dependent.
- Education credits: the American Opportunity Credit and Lifetime Learning Credit for qualified higher education costs.
- State child tax credits: a number of states run their own child tax credit in addition to the federal one.
How to claim
The Child Tax Credit is claimed on your federal income tax return using Schedule 8812. If your income is below the IRS Free File threshold you can prepare and file for free through irs.gov/freefile. Free in-person help is available through the IRS VITA and TCE programs for people who qualify by income, age or disability — find a site at irs.gov. You must file a return to receive the credit, even if you would not otherwise be required to file.
General guidance only — not regulated financial advice.
Why families miss out
The single most common reason families do not receive the Child Tax Credit is that they do not file a federal tax return, usually because their income was low enough that filing was not required. The credit cannot be paid without a return. If you did not file in a previous year and think you would have qualified, you can generally still file a prior-year return and claim a refund within the IRS time limit — check irs.gov or ask a VITA volunteer.
A second common reason is a missing or invalid Social Security number for the child. The Child Tax Credit requires an SSN valid for employment, issued before the return's due date including extensions. A child with only an ITIN may qualify for the Credit for Other Dependents instead.
Divorced and separated parents
Only one person can claim a child for the Child Tax Credit in a given tax year. Generally it is the custodial parent — the one the child lived with for the greater number of nights. A custodial parent can release the claim to the other parent using IRS Form 8332. Because two parents claiming the same child triggers IRS correspondence and delays refunds for both, agreeing in advance who claims which child, and documenting it, avoids a predictable problem.