What Disqualifies You From the Child Tax Credit?

The Child Tax Credit (CTC) provides financial relief for families, but strict IRS eligibility rules mean not everyone qualifies. Mistakes such as exceeding income limits, identification errors, or claiming a child who doesn’t meet residency or relationship requirements can result in disqualification. Understanding these criteria is essential to avoid delays or reductions in your tax refund.

Income Exceeds Allowed Limits

The Child Tax Credit is designed for low- and middle-income families, but benefits phase out for higher earners. In 2024, the full $2,000 credit per child is available to single filers earning up to $200,000 and married couples filing jointly up to $400,000. Beyond these thresholds, the credit reduces by $50 for every $1,000 over the limit. For example, a married couple earning $420,000 would see their credit drop by $1,000.

The Additional Child Tax Credit (ACTC), which allows some taxpayers to receive a refundable portion, has stricter income rules. Earned income must exceed $2,500, and the refundable portion is capped at $1,600 per child. Families with little or no earned income may not qualify for the ACTC, even if they are eligible for the nonrefundable portion.

Invalid Identification

Identification errors frequently lead to denied Child Tax Credit claims. Each qualifying child must have a valid Social Security Number (SSN) issued before the tax return’s due date, including extensions. If the SSN is missing, incorrect, or obtained after the filing deadline, the credit is disallowed. The Tax Cuts and Jobs Act of 2017 eliminated the ability to claim the credit with an Individual Taxpayer Identification Number (ITIN) or Adoption Taxpayer Identification Number (ATIN).

Mismatches between the SSN and the child’s name, as recorded by the Social Security Administration (SSA), can also trigger rejection. Even minor errors—such as transposed digits or misspellings—can cause problems. Taxpayers should ensure all information matches official records before filing.

A taxpayer’s own identification must also be valid. The IRS requires a valid SSN or ITIN for the person claiming the credit. Filing without an approved ITIN may result in the return being processed but the credit denied. Those needing an ITIN must apply using Form W-7, which can take weeks to process, delaying any refund.

Unmet Residency or Citizenship Criteria

Both the child and the taxpayer must meet residency and citizenship requirements. The child must have lived with the taxpayer for more than half the tax year—at least 183 nights. Exceptions apply for temporary absences due to school, medical care, or military service. In shared custody cases, only the custodial parent—typically the one with whom the child resided the most—can claim the credit unless a formal waiver (Form 8332) is filed.

The child must also be a U.S. citizen, U.S. national, or U.S. resident alien. Children born in the U.S. automatically qualify, but those born abroad to U.S. citizens must have acquired citizenship at birth or obtained a Certificate of Citizenship. Lawfully present resident aliens can qualify if they meet the substantial presence test, which considers the number of days spent in the U.S. over a three-year period. However, children with only an ITIN, such as those on certain visa statuses, do not qualify.

Insufficient Relationship to the Child

A qualifying child must be directly related to the taxpayer—such as a son, daughter, stepchild, foster child, sibling, stepsibling, or a descendant of any of these (grandchild, niece, or nephew). Cousins, godchildren, or unrelated dependents do not qualify, even if they live in the same household.

Legal guardianship alone does not establish eligibility. A taxpayer caring for a child who is not biologically or legally related cannot claim the credit unless they have formally adopted the child or have a foster care placement authorized by a court or government agency. Simply providing financial support or housing is not enough. For example, raising a significant other’s child without marriage or legal guardianship does not qualify.

Child’s Age Requirements Not Fulfilled

A qualifying child must be under 17 at the end of the tax year. Even if a child turns 17 on December 31, they no longer qualify. Families with older children may need to explore other tax benefits, such as the Credit for Other Dependents, which provides a smaller, nonrefundable $500 credit per dependent who does not meet the age requirement.

Parents often assume that a previously eligible child will continue to qualify, leading to unexpected reductions in refunds or tax liabilities. Taxpayers should verify each dependent’s birthdate before filing.

Dependent Already Claimed Elsewhere

Only one taxpayer can claim a child for the Child Tax Credit in a given tax year. Conflicts often arise in shared custody situations when both parents attempt to claim the same dependent. If two taxpayers file returns claiming the same child, the IRS typically accepts the first return processed and rejects the second, requiring the affected taxpayer to amend their filing or provide documentation proving eligibility.

To resolve disputes, the IRS applies tiebreaker rules outlined in Publication 501. These rules prioritize claims based on custody duration, adjusted gross income (AGI), and legal agreements. Generally, the parent with whom the child lived the longest during the year has the right to claim the credit. If both parents had equal custody time, the credit goes to the parent with the higher AGI. If a non-parent, such as a grandparent, attempts to claim the child, their eligibility is secondary to a parent’s unless the parent does not file a return.

Fraudulent or Misleading Return

Submitting inaccurate or deceptive information on a tax return can lead to disqualification from the Child Tax Credit, as well as penalties, audits, or even criminal charges. The IRS actively monitors filings for inconsistencies, particularly when dependents are claimed improperly. Knowingly providing false details—such as listing a child who does not exist, inflating income to qualify for a refundable credit, or misrepresenting residency status—can result in fines or a ban from claiming the credit for up to ten years.

Even unintentional errors, such as failing to update filing status after a divorce or mistakenly claiming a child who no longer qualifies, can result in adjustments to a tax return. If the IRS disallows a claim, the taxpayer may need to provide supporting documentation, such as school records, medical bills, or court orders, to prove eligibility. Repeated incorrect claims may lead to additional scrutiny in future tax years, making it essential to review all information carefully before filing.