California Dependent Tax Credit: Who Qualifies?

California residents can benefit from several tax credits designed to help manage the costs of supporting dependents. These federal and state-level programs can directly lower a taxpayer’s final tax bill. The specific credits a taxpayer can claim depend on factors like income, the dependent’s age, and their relationship to the taxpayer.

Defining a Dependent

Before claiming any dependent-related tax credit, a person must meet the definition of either a “Qualifying Child” or a “Qualifying Relative.” California’s dependency rules generally align with federal standards.

A Qualifying Child must meet several tests, including age, relationship, and residency. The child must be under the age of 17, be related to the taxpayer (such as a son, daughter, or grandchild), and have lived with the taxpayer for more than half of the year. A Qualifying Relative can be of any age but must meet an income test, and the taxpayer must have provided more than half of their financial support for the year. A valid Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) is typically required for any dependent claimed.

Federal Credits for Dependents

Federal Child Tax Credit (CTC)

The CTC is a federal credit for taxpayers with qualifying children. The credit is worth up to $2,000 per child. A portion of the CTC may be refundable, meaning you could receive money back even if you don’t owe any federal income tax. For the 2024 tax year, up to $1,700 per child is refundable. The credit begins to phase out for single filers with an adjusted gross income (AGI) over $200,000 and for married couples filing jointly with an AGI over $400,000.

Federal Credit for Other Dependents (ODC)

For dependents who do not meet the criteria for the CTC, such as children age 17 or older or other relatives like an elderly parent, the Credit for Other Dependents is available. This nonrefundable credit is worth $500 per qualifying dependent. It can reduce a taxpayer’s liability to zero, but no portion of it is paid out as a refund. The income limitations for the ODC are the same as those for the CTC.

California’s Young Child Tax Credit (YCTC)

In addition to federal credits, California offers the Young Child Tax Credit (YCTC). This credit is for lower-income taxpayers with a qualifying child under the age of six. The YCTC is a refundable credit. To qualify, a taxpayer must also be eligible for the California Earned Income Tax Credit (CalEITC) and have an earned income of $31,950 or less. For the 2024 tax year, the YCTC can provide a credit of up to $1,154.

Understanding Key Differences and How to Claim

Federal credits (CTC and ODC) are claimed on your federal income tax return, while the California YCTC is claimed on your state income tax return. Taxpayers in California may be able to claim a combination of these credits. For example, a family could claim the federal Child Tax Credit for their 10-year-old child and the Credit for Other Dependents for a 17-year-old child on their federal return. If their income is low enough and they have a child under six, they might also claim the Young Child Tax Credit on their California state return.