How Much Is the Child Tax Credit Per Child?
Understand how your income and family details determine your Child Tax Credit amount. This guide clarifies the current rules for this important family tax benefit.
The Child Tax Credit is a federal tax benefit providing financial relief to families. This credit directly reduces the amount of income tax a family might owe, which is different from a deduction that only lowers taxable income. The specific amount of the credit and a family’s ability to claim it depend on several factors determined annually.
Determining Child Eligibility
Before a taxpayer can consider their own income or calculate a potential credit, they must first confirm they have a “qualifying child” under IRS rules. For the 2024 tax year, a child must meet seven specific tests to be eligible. Failing even one of these tests means the child does not qualify for this particular credit, though they may qualify for the Credit for Other Dependents.
- Relationship: The child must be the taxpayer’s son, daughter, stepchild, eligible foster child, brother, sister, half-sibling, stepsibling, or a descendant of any of these individuals, such as a grandchild, niece, or nephew.
- Age: The child must have been under the age of 17 at the end of the tax year. A child who turns 17 on December 31st of the tax year does not qualify.
- Residency: The child must have lived with the taxpayer for more than half of the year.
- Support: The child cannot have provided more than half of their own financial support during the year.
- Dependent Status: The taxpayer must claim the child as a dependent on their tax return.
- Joint Return: The qualifying child cannot file a joint tax return for the year, unless it is filed solely to claim a refund of withheld taxes.
- Citizenship: The child must be a U.S. citizen, U.S. national, or a U.S. resident alien and possess a Social Security number valid for employment.
Calculating Your Credit Amount
For the 2024 tax year, the maximum Child Tax Credit is $2,000 per qualifying child. However, this amount can be reduced for higher-income taxpayers through a process known as a phase-out. The reduction begins when a taxpayer’s modified adjusted gross income (MAGI) exceeds $400,000 for those married filing jointly or $200,000 for all other filing statuses, such as single or head of household.
The credit is reduced by $50 for every $1,000, or fraction of that amount, that the taxpayer’s MAGI is above the applicable threshold. For example, if a married couple filing jointly has a MAGI of $405,300 and one qualifying child, their income exceeds the threshold by $5,300. This excess is rounded up to the next $1,000, becoming $6,000, which results in a credit reduction of $300 ($50 multiplied by 6). Their total credit would be $1,700 instead of the full $2,000.
A portion of the Child Tax Credit is refundable through the Additional Child Tax Credit (ACTC). A refundable credit means a taxpayer can receive money back as a refund even if they do not owe any income tax. For 2024, the maximum refundable portion of the credit is $1,700 per child. To claim the ACTC, a taxpayer must have earned income of at least $2,500. The refundable amount is calculated as 15% of earned income above that $2,500 threshold, up to the $1,700 maximum per child.
Taxpayers should be aware of potential legislative changes. The Tax Relief for American Families and Workers Act of 2024, which passed the House in early 2024, has not been passed into law by the Senate. This bill proposes increasing the refundable portion of the credit to $1,900 for the 2024 tax year. Since this legislation is not yet law, all calculations for the 2024 tax year must use the existing $1,700 maximum refundable amount.
How to Claim the Child Tax Credit
Taxpayers claim the Child Tax Credit directly on their federal income tax return, Form 1040, and do not need to apply for it separately. On this form, the taxpayer must list each qualifying child, along with their valid Social Security number.
To calculate the credit, taxpayers must complete and attach Schedule 8812, Credits for Qualifying Children and Other Dependents, to their Form 1040. This schedule guides filers through the income phase-out calculations and determines the final amount of the Child Tax Credit and any Additional Child Tax Credit. The final credit amount from Schedule 8812 is then entered on Form 1040. While most tax preparation software automatically completes this form, submitting an accurate Schedule 8812 is required.