How Much Do I Need to Make to Get the Child Tax Credit?

The Child Tax Credit (CTC) helps families offset the cost of raising children by reducing tax liability or providing a refund. Eligibility depends on financial and personal factors, making it important to understand the income requirements.

Required Earned Income Threshold

To qualify for the refundable portion of the Child Tax Credit, known as the Additional Child Tax Credit (ACTC), you must have at least $2,500 in earned income for the 2024 tax year. Earned income includes wages, salaries, tips, and self-employment earnings but excludes passive income such as dividends, interest, or rental income.

For example, if you earn $3,000 from a part-time job, you meet the threshold. However, if your only income comes from investments, you will not qualify.

The refundable portion is 15% of earned income exceeding $2,500, capped at $1,600 per child. If you earn $10,000, the refundable amount would be ($10,000 – $2,500) × 15% = $1,125. The total credit per child is $2,000, with the remaining $400 being non-refundable, meaning it can only reduce tax liability to zero.

Maximum Adjusted Gross Income Allowed

The Child Tax Credit phases out for higher-income taxpayers. In 2024, the phase-out begins at $200,000 for single filers and $400,000 for married couples filing jointly. Once adjusted gross income (AGI) exceeds these limits, the credit is reduced by $50 for every $1,000 over the threshold.

For instance, a single filer with an AGI of $210,000 would see their credit reduced by $500. This reduction applies to the total credit, not per child, meaning families with multiple children could lose a significant portion of their benefit.

Income sources such as bonuses, capital gains, and rental income contribute to AGI and may push taxpayers over the limit. Those near the threshold may consider increasing retirement contributions or other deductions to maintain eligibility for the full credit.

Filing Status Considerations

Filing status affects eligibility. Married couples filing jointly have a higher income phase-out threshold than those filing separately. Married individuals filing separately face the same $200,000 limit as single filers, making it easier to exceed the threshold and lose part or all of the credit.

For single parents, filing as head of household generally provides a better tax outcome than filing as a single filer. This status offers a higher standard deduction and lower tax rates, maximizing the credit. To qualify, you must have paid more than half the cost of maintaining a home for a qualifying dependent.

If two unmarried parents share custody, only one can claim the credit for a child each year. Typically, the parent with whom the child lived for most of the year is eligible. In cases of divorce or separation, the custodial parent is usually entitled to the credit unless they transfer this right to the non-custodial parent using IRS Form 8332. Without this form, the IRS defaults to awarding the credit to the custodial parent.

Qualifying Child Criteria

To claim the Child Tax Credit, a child must meet specific IRS requirements. The child must be under 17 at the end of the tax year. If they turn 17 on December 31, they no longer qualify.

The child must be directly related to the taxpayer. Eligible relationships include biological children, stepchildren, adopted children, and foster children placed by an authorized agency. Siblings, half-siblings, and their descendants, such as nieces or nephews, may also qualify if they meet all other conditions.

The child must live with the taxpayer for more than half the year, with exceptions for temporary absences due to school, medical care, or military service.

Credit Calculation Factors

The Child Tax Credit amount depends on income, the number of qualifying children, and whether the credit is refundable. The base credit per child for 2024 is $2,000, with up to $1,600 being refundable. The refundable portion, known as the Additional Child Tax Credit (ACTC), is 15% of earned income above $2,500.

For example, a taxpayer earning $20,000 would have ($20,000 – $2,500) × 15% = $2,625 in potential refundable credit. However, since the maximum refund per child is capped at $1,600, they would receive only that amount per eligible child.

For higher-income earners, the credit phases out at $50 for every $1,000 of AGI above the threshold. A married couple with two qualifying children and an AGI of $420,000 would see a reduction of ($420,000 – $400,000) ÷ 1,000 × 50 = $1,000, lowering their total credit from $4,000 to $3,000.

Documentation Requirements

Each qualifying child must have a valid Social Security number (SSN) issued before the tax filing deadline. Without an SSN, the child will not be eligible. This differs from other dependent-related tax benefits, such as the Credit for Other Dependents, which allows Individual Taxpayer Identification Numbers (ITINs) or Adoption Taxpayer Identification Numbers (ATINs).

Taxpayers must also provide proof of the child’s residency and relationship. Acceptable documents include school records, medical statements, or government agency letters confirming the child lived with the taxpayer for more than half the year. In cases of shared custody, the IRS may request additional verification, such as a signed Form 8332, to determine which parent is eligible to claim the credit.