The Child Tax Credit is for parents and guardians who meet income and custody rules

The Child Tax Credit reduces your federal income tax dollar-for-dollar if you have dependent children. You must be the child's parent, legal guardian, or may have access to relative; the child must be under 17 at the end of the tax year; and you must claim them as a dependent on your tax return. Your income cannot exceed certain thresholds that vary by filing status. The IRS sets these limits, and they change each year.

The credit is not a refund you receive automatically—you claim it when you file your tax return. If the credit is larger than the tax you owe, you may receive the difference as a refund, but only if you meet additional rules about how much of the credit is refundable. This matters because it determines whether you get money back or straightforward owe less.

Key Takeaways

  • You must claim the child as a dependent on your tax return, and they must be under 17 at the end of the tax year.
  • Your income must stay below a threshold set by the IRS—the limit depends on whether you file as single, married filing jointly, or head of household.
  • The child must be a U.S. citizen, national, or resident alien with a valid Social Security number.
  • If you are married, you generally must file jointly to claim the credit, with limited exceptions.
  • Part of the credit may be refundable, meaning you could receive money back even if you owe no tax, but refundability depends on your income and filing status.

Income limits that determine whether you can claim the credit

The IRS sets an income threshold above which the credit begins to phase out—meaning it shrinks as your income rises. For the 2023 tax year, the phase-out begins at $400,000 for married couples filing jointly, $200,000 for single filers, and $200,000 for heads of household. These thresholds increase slightly each year to account for inflation, but the IRS announces the exact amount in January of each tax year.

Your income for this purpose is your modified adjusted gross income (MAGI), which is usually your adjusted gross income from your tax return. If your MAGI exceeds the threshold, the credit reduces by $50 for each $1,000 (or fraction thereof) over the limit. This reduction can eliminate the credit entirely if your income is high enough.

You do not lose the credit abruptly at the threshold—it phases out gradually. This means if you are just slightly over the limit, you still receive most of the credit. The IRS worksheet on your tax form walks you through the calculation if you are affected.

Custody and relationship rules that matter

The child must be your son, daughter, stepchild, foster child, sibling, or descendant of a sibling (niece or nephew). Adopted children count the same as biological children. The child must live with you for more than half the tax year—not counting temporary absences for school, medical care, military service, or vacation.

If the child's parents are divorced or separated, the parent who has custody for the greater part of the year usually claims the credit. The IRS calls this the "custodial parent." If custody is split equally, the parent with the higher income claims the credit unless they sign a form agreeing to let the other parent claim it.

If you are the non-custodial parent and the custodial parent agrees to let you claim the credit, they must sign Form 8332 (Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent). You attach this form to your tax return as proof of the agreement.

Citizenship and identification requirements

The child must be a U.S. citizen, national, or resident alien. You prove this by providing their Social Security number on your tax return. If the child does not have a Social Security number, you cannot claim the credit—you must have applied for one before you file your return.

The Social Security number must be valid for employment in the United States. If the IRS later determines the number is invalid or does not match the child's name and date of birth, the credit will be disallowed and you may owe back taxes plus penalties.

How the refundable portion works

Up to $1,700 of the Child Tax Credit is refundable for the 2023 tax year, meaning you can receive it as a refund even if you owe no federal income tax. This refundable portion is called the Additional Child Tax Credit or the Refundable Child Tax Credit. The remaining portion is non-refundable—it can only reduce the tax you owe, not generate a refund.

To receive the refundable portion, your earned income (wages, self-employment income, and certain other sources) must exceed a minimum threshold, which is $2,500 for the 2023 tax year. If your earned income is below this threshold, you cannot claim the refundable portion, though you may still claim the non-refundable portion if you owe tax.

The refundable amount is calculated on Schedule 8812 (Credits for may have access to Children and Other Dependents), which you attach to your Form 1040. If you file electronically, tax software usually calculates this for you.

Filing status and marriage rules

If you are married, you must file a joint return to claim the credit. If you file separately, neither spouse can claim it. This rule applies even if one spouse has no income and the other has substantial income.

There is one exception: if you are married but lived apart from your spouse for the last six months of the tax year, you may be able to file as head of household instead of married filing separately, which would allow you to claim the credit. This is a narrow exception and requires meeting specific IRS rules.

If you are single, divorced, or widowed, you can claim the credit if you meet the other requirements. Head of household filers can also claim it.

What happens if you claim the credit incorrectly

If you claim the credit for a child who does not meet the requirements—for example, a child over 16, a child who does not live with you, or a child without a valid Social Security number—the IRS will disallow the credit. You will owe back taxes, plus interest calculated from the original due date of your return.

If the IRS determines the error was not intentional, you may avoid penalties. However, if the error appears intentional or part of a pattern, you could face accuracy-related penalties of 20% of the underpaid tax. In cases of fraud, criminal penalties are possible, though these are rare.

The IRS matches Social Security numbers on tax returns against its records. If a number does not match the name and date of birth you report, the credit will be rejected and you will receive a notice. You then have the opportunity to correct the information and resubmit.

Frequently Asked Questions

Can I claim the credit if my child is 17 years old?

No. The child must be under 17 at the end of the tax year. If your child turns 17 on December 31, they are considered 17 at year-end and do not may have access to. If they turn 17 on January 1 of the following year, they were under 17 at the end of the prior tax year and do may have access to for that year.

What if I share custody with the other parent and we cannot agree on who claims the credit?

The parent with custody for the greater part of the year has the right to claim the credit unless they sign Form 8332 releasing that right. If you have equal custody and cannot agree, the parent with the higher income claims the credit by default. The other parent cannot claim it without a signed release.

Can I claim the credit if my child does not have a Social Security number yet?

No. You must have a valid Social Security number for the child to claim the credit. You should explore for one before filing your return. If you file before the number arrives, you can file an amended return once you have it.

Do I lose the entire credit if my income is slightly over the limit?

No. The credit phases out gradually. For every $1,000 over the income threshold, the credit reduces by $50. If you are just slightly over, you lose only a small portion of the credit. The exact reduction depends on how far over the limit you are.

What if I claimed the credit and the IRS later says the child does not may have access to?

The IRS will send you a notice disallowing the credit and explaining why. You will owe back taxes plus interest from the original due date. If you believe the IRS made an error, you can respond to the notice and provide documentation supporting your claim. You may also request an appeals conference if you disagree with the information.