What is the Child Tax Credit?
The Child Tax Credit (CTC) is a federal nonrefundable tax credit available to taxpayers who have children and meet certain requirements. To be eligible, your child must be under 17 years old, have a valid Social Security Number, and be listed as a dependent on your tax return. The credit can reduce your tax amount on a dollar-for-dollar basis, which could eliminate your tax bill altogether.
For the year 2023 (when you file your taxes in 2024), the CTC is worth $2,000 for each qualifying child if your modified adjusted gross income is $400,000 or below (married filing jointly) or $200,000 or below (all other filers). If you qualify, you can receive a refundable portion, known as the additional child tax credit, which is worth up to $1,600 per child. Some families can also receive monthly payments instead of waiting until tax time.
The Tax Relief for American Families and Workers Act of 2024–a nonpartisan proposal introduced on January 16, 2024–plans to boost the maximum refundable amount per child in the upcoming tax years. The suggested increments are $1,800 for the 2023 tax year, $1,900 for the 2024 tax year, and $2,000 for the 2025 tax year.
What is the Additional Child Tax Credit?
The additional child tax credit (ACTC) is the refundable part of the child tax credit. If you meet the requirements for the CTC but cannot take full advantage because you either do not owe taxes or owe less than the credit amount, you might still be eligible for a partial refund by applying for the additional child tax credit.
To claim the ACTC, you need to meet the same income and dependent criteria as the CTC, and there are also additional rules to consider:
- You must have earned income of at least $2,500 or have three or more qualifying dependents.
- You or your partner (if married filing jointly) cannot exclude foreign-earned income from your taxes by filing Form 2555 or Form 2555-EZ.
Frequently Asked Questions