Child Tax Credit: How it works and who qualifies this year
Editor’s note (as of 01/07/25): Heard rumbles on social media about Child Tax Credit payments last summer or even now? At this time, Congress has not passed any legislation that changes the rules for 2024 tax returns. If you have questions about pending or recently passed legislation or Child Tax Credit updates, be sure to rely on a trusted tax professional, like those at H&R Block.
The Child Tax Credit is a valuable tax benefit claimed by millions of American parents with the goal of offsetting the costs of raising a child. The Child Tax Credit 2024 is worth up to $2,000 for each qualifying child for returns filed in 2025.
In this post, we’ll outline all the details about the Child Tax Credit, Advance Child Tax Credit and answer questions such as “how much is the child tax credit?” Read on find all about this popular credit.
What is the Child Tax Credit for 2024?
Simply stated, the Child Tax Credit (CTC) is a tax credit for eligible families with dependent children under age 17 at the end of the tax year. Taking the credit can help lower your tax bill dollar-for-dollar—and depending on how much you owe; it may take your taxes owed down to zero.
Like many tax benefits, you must meet certain requirements before you can claim the Child Tax Credit. These include details about the dependent child, the relationship between you and the child, and your income. We’ll get into these details below as we review who qualifies for the Child Tax Credit.
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Is the Child Tax Credit refundable?
The Child Tax Credit by itself is not a refundable credit. But, the related credit, called the Additional Child Tax Credit, is refundable. This article covers Child Tax Credit details for both, but here are the major takeaways:
- The nonrefundable Child Tax Credit can reduce your tax to zero. If the amount of your credit is higher than the taxes you owe, you don’t “get back” the rest of the credit as a refund, but you may be eligible for the Additional Child Tax Credit.
- The refundable Additional Child Tax Credit kicks in if you have any part of the Child Tax Credit remaining and you have earned income, as explained below.
How much is the 2024 Child Tax Credit?
For 2024 taxes (for returns filed in 2025), the IRS Child Tax Credit is worth up to $2,000 for each qualifying dependent child. You can claim this full amount if your income is at or below the modified adjusted gross income threshold (see the income phase out information below).
The refundable Additional Child Tax Credit is worth up to $1,700 per qualifying child.
Who qualifies for the Child Tax Credit?
Qualifying for the Child Tax Credit is about more than just having a child in your home. In fact, there are seven requirements, or “tests,” that must be met for a taxpayer to qualify for this credit.
Let’s dig into them:
- Age: The child must be under age 17 at the end of the tax year.
- Dependent status: The child must be allowed as a dependent on your tax return.
- Relationship: The child must be your own child, stepchild, sibling, or a descendant of your child, stepchild, or sibling. It also includes a foster child placed with you by an authorized placement agency.
- Citizenship: The child must be one of these: a U.S. citizen, a U.S. national, or a U.S. resident.
- Financial support: The child must not have provided more than half of their own support.
- Residency: The child must have lived with you for more than half of the tax year. There are exceptions for divorced or separated parents, where the child may live with the other parent for more than half the year, but you still may be able to claim the child.
- Filing status: The child must not have filed a joint return, except in certain cases where they filed only to claim a refund of withheld income tax or estimated taxes.
On top of these tests, you must also meet income thresholds to take full benefit as the credit phases out for high earners. Read on to understand how the phase out works.
Child Tax Credit income limit and phase-out
The Child Tax Credit amounts change as your Modified Adjusted Gross Income (MAGI) increases. In fact, once you reach a certain threshold, the credit amount decreases or phases out.
And the credit amount is reduced $50 for every $1,000—or fraction thereof— that your modified AGI is more than:
- $200,000 if filing as Single, Head of Household, or Qualifying Widow(er)
- $400,000 if Married Filing Jointly
- $200,000 if Married Filing Separately
For the purpose of this credit, your modified adjusted gross income (MAGI) is your AGI plus excluded foreign earned income, possession income, and foreign housing.
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Additional Child Tax Credit
If your tax liability is very low, the Child Tax Credit may not be the most favorable for your situation. Or, if you don’t owe any taxes at all, you may not see the benefit of filing a return. While you may not be required to file a return, you could benefit from filing and claiming the refundable Additional Child Tax Credit.
This is where the difference between a refundable vs. nonrefundable tax credit matters. Claiming the ACTC means you could receive money back. The maximum refundable portion of the Additional Child Tax Credit is limited to $1,700 per qualifying child.
Additional Child Tax Credit 2024 qualifications
The same requirements that apply to the Child Tax Credit also apply to the Additional Child Tax Credit. What’s more, your earned income must be more than $2,500 to qualify. The ACTC is equal to 15% of your earned income over the $2,500 threshold. The maximum ACTC is the smaller of the remaining CTC after reducing your tax to $0 or $1,700 per qualifying child.
If you have three or more qualifying children, you can claim a refundable credit of the net Social Security and Medicare tax you paid in excess of your Earned Income Credit (EIC), if this results in a higher credit.
How to claim the IRS Child Tax Credit 2024
You claim the Child Tax Credit as part of filing your annual tax return with Form 1040. You’ll also need to complete and include Schedule 8812 (Credits for Qualifying Children and Other Dependents). This document will help you figure out how much of the Child Tax Credit/Additional Child Tax Credit you’re eligible to receive.
When to expect your Child Tax Credit refund
The typical timeframe for the Internal Revenue Service (IRS) to issue a refund is 21 days or less if you’ve filed electronically and chosen to receive your refund by direct deposit.
However, if you have anything missing or errors on your return, it could require additional review. It’s a good idea to double check your return to avoid this extra processing time. Additionally, it could take longer to receive if you’ve chosen a paper check, of course, as you may encounter longer mail times.
Note: IRS is required by law to hold refunds that include the Earned Income Credit or Additional Child Tax Credit until mid-February. Additionally, you can’t carry forward any portion of the federal Child Tax Credit to future tax years.
Additional Child Tax Credit requirements and rules to know
There’s one more tax credit detail to note, relating to relationship status.
Child Tax Credit considerations for divorced and separated parents
The Child Tax Credit and Additional Child Tax Credit requirements apply to divorced or separated parents, too. However, if the parents have a qualifying agreement for the noncustodial parent to claim the child, the noncustodial parent who claims the child as a dependent is eligible to claim the Child Tax Credit. The custodial parent must provide the noncustodial parent with a signed Form 8332. A divorce decree or other agreement is not sufficient for the noncustodial parent to claim the child.
A parent can claim the CTC or ACTC if their filing status is Married Filing Separately.
Child Tax Credit FAQs
Still have CTC questions? Review our frequently asked questions for extra clarity on Child Tax Credit updates and other details.
How is the Child Tax Credit different from the Child and Dependent Care Tax Credit?
Although they sound alike, the Child Tax Credit and the Child and Dependent Care Credit are two different credits with separate rules and qualifications. The Child Tax Credit is a tax benefit for taxpayers with children under age 17, while the Child and Dependent Care Credit is a credit designed for those who have young children under 13 or disabled dependents (such as a disabled parent) requiring child care or dependent care while the taxpayer works.
What is the Other Dependent Credit (ODC)?
The Credit for Other Dependents is a $500 nonrefundable credit available to families with eligible dependents. You can claim the ODC in addition to the Child and Dependent Care Credit and the Earned Income Credit.
If your child is 17 years old or older at the end of the tax year and no longer eligible for the Child Tax Credit, you may want to consider taking the Credit for Other Dependents.
Is there a state-level CTC in addition to the federal tax credit?
Yes, several states have state-specific Child Tax Credits and eligibility requirements will be different for each state. Visit the Department of Revenue website in your state for specific guidelines, or connect with a Tax Pro.
Does the CTC still include an advance payment?
No, the Advance Child Tax Credit payments were part of the American Rescue Plan Act of 2021 and were specific to Child Tax Credit 2021. The legislation also increased the value of the credit (referred to as the expanded Child Tax Credit at the time). As a result of this change, the IRS distributed the child tax credit payment to eligible taxpayers in monthly payment installments. Half of the credit was distributed as an advance Child Tax Credit over six months in 2021. Under current tax law, the CTC doesn’t include advance payments.
Can I claim the Child Tax Credit if I’m unemployed and received benefits?
Receiving unemployment income won’t disqualify you from claiming the Child Tax Credit. However, because this credit reduces the tax you owe, you must have some taxable income to claim it.
If your tax liability (what you owe in taxes for this year) is below $2,000, then you will not be able to use the full amount of the credit. This may be the case for you if unemployment benefits were your only source of income, or if your income has been greatly reduced this year. However, you may be able to claim the Additional Child Tax Credit if you have sufficient earned income.
There are other tax credits that may be affected by unemployment. You must have earned income in the year to claim either of these credits: the Earned Income Tax Credit (EITC) and the Child and Dependent Care Credit.
Can you get the Child Tax Credit with no income?
No, you don’t need to earn an income to claim the Child Tax Credit, as long as your primary residence is in the U.S. for more than half a tax year and you have a qualifying child. For example, you may have retirement income and investment income. If your tax liability is not more than the Child Tax Credit, you would need earned income to claim the Additional Child Tax Credit.
Get help claiming the Child Tax Credit and filing Schedule 8812
Have questions or ready to file your Schedule 8812? We’re here to help! Whether you choose to file with a tax pro or file with H&R Block Online, you can rest assured that we’ll get you the biggest refund possible.
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