The child tax credit is a financial benefit designed to provide assistance to families with dependent children. It is a form of tax relief that helps eligible families reduce their tax liability and potentially receive a refund if the credit exceeds their tax owed.
This credit recognizes the financial responsibilities that come with raising children and aims to alleviate some of the economic burden for families.
Who qualifies for the child tax credit?
You can claim the child tax credit for each qualifying child who has a Social Security number that is valid for employment in the United States.
To be a qualifying child for the 2024 tax year, your dependent generally must:
- Be under age 17 at the end of the year
- Be your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these (for example, a grandchild, niece or nephew)
- Provide no more than half of their own financial support during the year
- Have lived with you for more than half the year
- Be properly claimed as your dependent on your tax return
- Not file a joint return with their spouse for the tax year or file it only to claim a refund of withheld income tax or estimated tax paid
- Have been a U.S. citizen, U.S. national or U.S. resident alien
- Have a valid Social Security Number is issued before the due date of your tax return (including extensions)
Some individuals may be able to claim the credit even if they don’t normally file a tax return. Parents and guardians with higher incomes may be eligible to claim a partial credit.
Can both parents claim the child tax credit?
In cases of divorced or separated parents, determining who can claim the child tax credit can get complicated.
Generally, the custodial parent—meaning the parent with whom the child lives for the majority of the year—claims the credit. However, there are situations where the non-custodial parent may be eligible to claim the credit if certain conditions are met, such as when the custodial parent agrees to waive their claim or when it’s stipulated in a divorce decree or separation agreement. Divorced or separated parents may want to seek legal advice to ensure the appropriate party claims the credit, as an improper claim could lead to issues with the IRS.
Can you get a child tax credit for an unborn child?
On a federal tax return, the child tax credit generally applies to children who have been born during the tax year.
However, changes to legislation could impact this eligibility. In the past, there have been discussions about extending certain benefits, like the child tax credit, to include unborn children at state level. As with all tax legislation, accountants must be sure to keep up with changes to the child tax credit at the state and federal level.
How much is the child tax credit?
The amount of the child tax credit has varied over the years due to legislative adjustments.
You qualify for the full amount of the 2024 child tax credit for each qualifying child if you meet all eligibility factors and your annual income is not more than $200,000 ($400,000 if filing a joint return). Parents and guardians with higher incomes may be eligible to claim a partial credit.