The Child Tax Credit Reduces Your Tax Bill by Up to $2,000 Per Child

The Child Tax Credit is a reduction in the amount of federal income tax you owe, based on the number of may have access to children in your household. If you have one child, you can reduce your tax bill by up to $2,000. If you have two children, you can reduce it by up to $4,000. The credit applies to children under age 17 at the end of the tax year.

The credit is not the same as a deduction. A deduction lowers your taxable income; a credit directly lowers the tax you owe. That makes it more valuable. If you owe $3,000 in federal tax and you have one may have access to child, the credit can reduce what you owe to $1,000.

The credit phases out if your income is above a certain threshold. For the 2024 tax year, the phase-out begins at $400,000 for married couples filing jointly and $200,000 for single filers. The exact income limits change each year.

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.
  • A child must be a U.S. citizen, national, or resident alien with a valid Social Security number to count.
  • You claim the credit on your federal tax return by listing each child's name and Social Security number.
  • If the credit is larger than the tax you owe, you may receive the difference as a refund, up to $1,700 per child for the 2024 tax year.
  • The credit is worth less if your income exceeds $400,000 (married filing jointly) or $200,000 (single).

Who Can Claim the Credit

You can claim the Child Tax Credit for each child who meets all of these conditions: the child is under age 17 at the end of the tax year, the child is your son, daughter, stepchild, foster child, sibling, or descendant of any of these (such as a niece or nephew), the child lived with you for more than half the year, you paid more than half the child's living expenses during the year, and the child is a U.S. citizen, national, or resident alien with a valid Social Security number.

The child does not have to be a dependent on your tax return in all cases, but in most situations they will be. If you and another person both claim the same child, the IRS will disallow the credit for one of you. If you are divorced or separated, the parent who has custody for the greater part of the year usually claims the credit, unless a custody agreement says otherwise.

Foster children count if they lived with you for the entire year and you provided more than half their support. A child you adopted during the year counts if they lived with you for the rest of the year after the adoption.

How to Claim the Credit on Your Tax Return

You claim the Child Tax Credit by filling out Schedule 8812 (if you have other credits or your income is high) or by entering the information directly on Form 1040 (if your situation is straightforward). Either way, you will need the child's full name and Social Security number exactly as they appear on the Social Security Administration's records.

If you file electronically, tax software will walk you through the questions and calculate the credit for you. If you file by paper, you list each child on the form and the software or the IRS will compute the amount. You do not need to send birth certificates or proof of residency with your return unless the IRS asks for it later.

The credit is claimed on the tax return you file for the year the child was born or turned 17. If a child turns 17 on December 31, 2024, you can claim the credit for the 2024 tax year. If they turn 17 on January 1, 2025, you cannot.

What Happens If the Credit Is Larger Than Your Tax Bill

If the Child Tax Credit is larger than the federal income tax you owe, you may receive the difference as a refund. This is called the refundable portion of the credit. For the 2024 tax year, up to $1,700 of the credit per child is refundable. The rest is non-refundable, meaning it can only reduce your tax bill to zero but cannot create a refund.

To receive the refundable portion, you must have earned income during the year (wages, self-employment income, or certain other types of income). If you had no earned income, you cannot claim the refundable part, though you can still claim the non-refundable part if you owe tax.

The refund is paid the same way as any other tax refund: by direct deposit to your bank account, by check mailed to your address, or by prepaid debit card, depending on how you filed and what you requested.

How Income Affects the Credit Amount

The full credit of $2,000 per child is available if your modified adjusted gross income (MAGI) is below the phase-out threshold. For 2024, that threshold is $400,000 for married couples filing jointly, $200,000 for single filers, and $200,000 for heads of household.

If your income is above the threshold, the credit is reduced by $50 for each $1,000 (or fraction of $1,000) over the limit. If you are married filing jointly with an income of $410,000, you are $10,000 over the threshold. The credit is reduced by $500 (10 × $50), so instead of $2,000 per child, you would receive $1,500 per child.

Your MAGI is usually your adjusted gross income (AGI) from your tax return. If you received foreign earned income, foreign housing exclusion, or foreign housing deduction, you may need to add those back in to calculate MAGI. The IRS instructions for Form 1040 will tell you if this applies to you.

Changes to the Credit Over Time

The Child Tax Credit has changed several times in recent years. From 2021 through 2025, the credit is $2,000 per child. In 2026, unless Congress acts, the credit is scheduled to drop to $1,000 per child and the age limit will change. The refundable portion is also scheduled to decrease.

The income thresholds and the refundable amount also change each year to account for inflation. The IRS publishes the current-year amounts in the instructions to Form 1040 and on its website each January.

If you received advance payments of the credit in 2024 (monthly payments sent to your bank account or mailed to you), you will need to account for those when you file your 2024 tax return. The IRS will send you a letter showing how much you received. You report that amount on your return, and the IRS reconciles it with the credit you are may have access to to claim.

Frequently Asked Questions

Can I claim the credit for a child who does not have a Social Security number?

No. The child must have a valid Social Security number. If your child was born in the United States but does not yet have a number, you can request one from the Social Security Administration. If your child is not a U.S. citizen and does not have a Social Security number, they do not count for this credit.

What if my child turned 17 during the tax year?

You can claim the credit for the year the child turned 17, but only if they were under 17 at the end of that tax year. If your child turned 17 on December 31, 2024, you can claim the credit for 2024. If they turned 17 on January 1, 2025, you cannot claim it for 2024.

Can I claim the credit if my child lived with me for only part of the year?

The child must have lived with you for more than half the year. If your child lived with you for six months and one day, that counts. If they lived with you for exactly six months, it does not. Temporary absences for school, vacation, or medical care are counted as time living with you.

What if I share custody with the other parent?

The parent who has custody for the greater part of the year claims the credit. If you share custody equally, the parent with the higher income usually claims it, unless you have a written agreement that says otherwise. Only one parent can claim the credit for each child in a given year.

Do I need to report the credit if I did not owe any tax?

If you had no tax liability but you had earned income, you should still file a return to claim the refundable portion of the credit. The refund can be worth hundreds or thousands of dollars even if you owed no tax. If you had no income and owed no tax, you do not need to file unless another rule requires it.