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Learn moreChild Tax Credit 2024: Requirements, Proposed Expansion
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The child tax credit (CTC) is a federal tax benefit that provides financial support for taxpayers with children below the age of 17. This year, the CTC has been in the news as lawmakers work to expand the credit.
The expansion bill, which has been stalled in the Senate for several weeks, has many taxpayers wondering if it will pass in time for the current filing season and whether to press pause on their returns.
The IRS says that filers should continue with business as usual: “Taxpayers should not wait for this legislation to file their returns," Danny Werfel, the IRS commissioner, said in a Feb. 15 hearing.
» Skip ahead: What the child tax credit expansion could mean for you
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What is the child tax credit?
The current child tax credit is a nonrefundable tax credit available to taxpayers with dependent children under the age of 17. The credit can reduce your tax bill on a dollar-for-dollar basis, potentially eliminating your tax bill altogether. Some taxpayers may also be eligible for a partial refund of the credit through what's called the “additional child tax credit" (ACTC).
To qualify, taxpayers and their children must meet certain eligibility criteria that take into account the child's age, as well as their relationship to the person claiming them.
Taxpayers must also meet income thresholds to take full advantage of the benefit because the credit phases out for high earners. Once your modified adjusted gross income exceeds the income limit, the credit amount you get may be smaller, or you may be deemed ineligible.
How much is the child tax credit in 2024?
Child tax credit 2023 (taxes filed in 2024)
For 2023, the child tax credit is worth $2,000 per qualifying dependent child if your modified adjusted gross income is $400,000 or below (married filing jointly) or $200,000 or below (all other filers). The refundable portion, also known as the additional child tax credit, is worth up to $1,600.
If your MAGI exceeds the above limits, your credit gets reduced by $50 for each $1,000 that your income exceeds the threshold.
Child tax credit 2024 (taxes filed in 2025)
For the 2024 tax year (tax returns filed in 2025), the child tax credit will be worth $2,000 per qualifying child, with $1,700 being potentially refundable through the additional child tax credit.
Requirements: Who qualifies for the child tax credit?
Taxpayers can claim the child tax credit for the 2023 tax year when they file their tax returns in 2024. Generally, there are seven “tests” you and your qualifying child need to pass: age, relationship, dependent status, residency, financial support, citizenship and income.
Age: Your child must have been under the age of 17 at the end of 2023.
Relationship: The child you’re claiming must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister or a descendant of any of those people (e.g., a grandchild, niece or nephew).
Dependent status: You must be able to properly claim the child as a dependent. The child also cannot file a joint tax return, unless they file it to claim a refund of withheld income taxes or estimated taxes paid.
Residency: The child you’re claiming must have lived with you for at least half the year (there are some exceptions to this rule).
Financial support: You must have provided at least half of the child’s support during the last year. In other words, if your qualified child financially supported themselves for more than six months, they’re likely considered not qualified.
Citizenship: Per the IRS, your child must be a "U.S. citizen, U.S. national or U.S. resident alien," and must hold a valid Social Security number.
Income: Parents or caregivers claiming the credit also typically can’t exceed certain income requirements. Depending on how much your income exceeds that threshold, the credit gets incrementally reduced until it is eliminated.
How to claim the child tax credit in 2024
For tax year 2023, you can claim the child tax credit and the additional child tax credit on the federal tax return (Form 1040 or 1040-SR) that you file by April 15, 2024, or by Oct. 15, 2024, with a tax extension.
You’ll also need to fill out Schedule 8812 (“Credits for Qualifying Children and Other Dependents”), which is submitted with your 1040. This schedule will help you to figure out your child tax credit amount and how much of the partial refund you may be able to claim if applicable.
Most quality tax software guides you through claiming the child tax credit with a series of interview questions, simplifying the process and even auto-filling the forms on your behalf. If your income falls below a certain threshold, you might also be able to get free tax software through IRS’ Free File.
Additional child tax credit
If you qualify for the CTC but can't take full advantage because you don't owe taxes or owe less than your credit amount, you may be able to get a partial refund by claiming the additional child tax credit. To claim the ACTC, all of the above income and dependent criteria must be met, but there are also a few more rules:
You must either have an earned income of at least $2,500 or have three or more qualifying dependents. Earned income typically means money from jobs or self-employment. It does not include money from passive sources such as dividends, pensions, welfare or unemployment.
You or your partner (if married filing jointly) cannot exclude foreign-earned income from your taxes by filing Form 2555 or Form 2555-EZ.
The IRS figures your additional child tax credit amount by multiplying your earned income above $2,500 by 15%. You can claim that number or however much of the CTC credit you were entitled to but couldn’t fully use, whichever number is less. But keep in mind that the maximum refund you can get for the 2023 tax year is capped at $1,600 per qualifying dependent. If you have three or more dependent children, the math can be more complex. See Schedule 8812 for more details.
2024 child tax credit news update
The Tax Relief for American Families and Workers Act of 2024, a piece of nonpartisan legislation that aims to modify the child tax credit, was passed by the House of Representatives on Jan. 31, but is stalled with the Senate.
If passed in its current format, the child tax credit expansion would temporarily extend significant benefits to lower-income families and those who are often unable to reap the full benefits of this tax credit.
Child tax credit expansion: What the tax deal could mean for you
The maximum refundable child tax credit amount is currently capped at $1,600 per dependent. It would increase to $1,800 for the current filing season. In tax years 2024 and 2025, the refundable amount would grow to $1,900 and $2,000.
The base child tax credit, currently worth $2,000 per qualifying child, would be adjusted for inflation for tax years 2024 and 2025. According to Eric Bronnenkant, a New York-based CPA and head of tax at Betterment, this could amount to a roughly $100 increase in the credit each year.
Beginning with tax returns filed this year until 2025, parents and caretakers would be allowed to factor in how many children they have when determining the total credit amount they are eligible for.
To qualify for the refundable portion of the credit, filers must earn at least $2,500. In tax years 2024 and 2025 (taxes filed in 2025 and 2026), filers could use their earned income from either the current year or the prior year to meet this requirement. This is especially significant for many lower-income families who might not otherwise qualify because they earned too little in a given year.
Should I file taxes now, or wait for the child tax credit expansion?
"The IRS reminds taxpayers eligible for the Child Tax Credit that they should not wait to file their 2023 tax return this filing season," the agency says on its website. The IRS says it is monitoring the legislation and will automatically make adjustments for eligible taxpayers if the bill is signed into law.
If a taxpayer has already filed their return and is eligible for an additional refund under the new child tax credit rules, they will not need to refile to submit an amended return, Werfel said.
How quickly could the IRS implement the child tax credit expansion?
The IRS estimates that only 10% of filers may be eligible for a slight adjustment to their refunds if the child tax credit expansion bill passes in its current form.
IRS commissioner Werfel confirmed in a hearing Feb. 15 that the agency would attempt to recalculate and issue any necessary refunds as quickly as six weeks after the bill passes: “It will be a top priority to make sure that this gets done.”
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When to expect your child tax credit refund
By law, the IRS can't release a refund for a return claiming the additional child tax credit until mid-February. Early filers who used direct deposit as their refund method, e-file, and submitted an error-free return should have seen refunds hit their accounts by Feb. 27, 2024, at the earliest, says the IRS.
If you filed by paper, the wait times generally increase. The agency's "Where's My Refund" tool can also help you get of sense of what's going on with your funds.
» Curious about what other credits you may qualify for? Here's a list of 22 common tax deductions and breaks
Consequences of a child tax credit error
An error on your tax form can delay your refund or the child tax credit portion of your refund. In some cases, the IRS could also deny the entire credit.
If the IRS denies your CTC claim:
You must pay back any CTC amount you’ve been paid in error, plus interest.
You might need to file Form 8862, "Information To Claim Certain Credits After Disallowance," before you can claim the CTC again.
If the IRS determines that your claim for the credit is erroneous, you may be on the hook for a penalty of up to 20% of the credit amount claimed.
State child tax credits
In addition to the federal child tax credit, a few states, including California, Colorado, and New York, also offer their own state-level CTCs that you may be able to claim when filing your state return. Visit your state's department of taxation website for more details.
What is the $500 credit for other dependents (ODC)?
If your child or a relative you care for doesn't quite meet the criteria for the CTC but you are able to claim them as a dependent, you may be eligible for a $500 nonrefundable credit called the "credit for other dependents." The IRS has a tool that can help you to determine if your dependent qualifies.
Child tax credit vs. child and dependent care credit
Although similar sounding, the child tax credit and the child and dependent care credit are not the same thing. The child tax credit is a tax incentive for people with children, while the child and dependent care credit is another tax credit for working parents or caretakers designed to help offset expenses such as day camp or after-school care. Both credits have different rules and qualifications.
