Child Tax Credit
An annual tax credit available to taxpayers with a qualifying dependent.
Commonly referred to as the CTC ( Child Tax Credit) or ACTC (Advance Child Tax Credit)
Do I Qualify for the Child Tax Credit?
To qualify for the child tax credit, an individual must be under 18 years old, be properly claimed as a dependent, and meet IRS relationship requirements. Additionally, the taxpayer must not have adjusted gross income that exceeds IRS income limitations.
2022 Child Tax Credit Details
A taxpayer may claim the child tax credit (CTC) for each qualifying child. The qualifying child is a qualifying child of the taxpayer, who hasn't attained age 17 before the close of the tax year. For 2021 only, the definition is expanded to include a child who hasn't attained age 18 before the close of 2021. For 2021, the credit amount is up to $3,600 for children under 6, and $3,000 for children 6 and under 18. Full credit is available if the taxpayer’s modified adjusted gross income is under $75,000 for single filers (separate return filers), $112,500 for heads of household, and $150,000 for those married filing jointly (or qualifying widows or widowers). The credit begins to phase out these thresholds. First phaseout occurs when Income exceeds the thresholds but is below $400,000 (married filing jointly) or $200,000 (all other filing statuses). The credit per child is reduced by $50 for each $1,000, but not below $2,000 per child. Second phaseout occurs when income exceeds $400,000 (married filing jointly) or $200,000 (other filing statuses). The credit per child is reduced by $50 for each $1,000, until the taxpayer is disqualified from the credit altogether.
In addition, a $500 nonrefundable credit for other dependents (ODC) is available for qualifying dependents who aren't qualifying children under the CTC rules.
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Generates a cash refund or reduces tax liabilities for qualifying individuals
Income limitations may limit value of the credit and should be considered when completing W-4 withholdings.
Assumptions When Taking the Child Tax Credit
Individuals listed as a dependent meeting the qualifications for dependents as defined by IRS guidelines.
Requirements to Claim the Child Tax Credit
To be eligible for the credit:
1. the taxpayer must provide at least half of the child’s support during the credit year;
2. the child must live with the taxpayer for at least half the year; and
3. the child cannot file a joint tax return.
The taxpayer must live in the U.S. for more than half the year (or, if filing jointly, one spouse must have a main home in the U.S. for more than half the year).
A qualifying eligible child can be the taxpayer’s son or daughter, stepchild, eligible foster child, siblings, including step-siblings or half-siblings a descendent of any of the above - for example a grandchild, niece or nephew.
Dependents must be a U.S. citizen, a U.S. national, U.S. resident, or a resident of Canada or Mexico, who do not file a joint return, and the taxpayer is the only person claiming them as a dependent.
Business Entities That Can Claim the Child Tax Credit
The material discussed on this page is meant for general illustration and/or informational purposes only and is not to be construed as investment, tax, or legal advice. You must exercise your own independent professional judgment, recognizing that advice should not be based on unreasonable factual or legal assumptions or unreasonably rely upon representations of the client or others. Further, any advice you provide in connection with tax return preparation must comply in full with the requirements of IRS Circular 230.