What Is the Child Tax Credit?

What Is the Child Tax Credit?

Let me explain the Child Tax Credit directly: it's a tax benefit for American taxpayers with children under 17 at the end of the year. For the 2023 tax year, which you file in 2024, you get $2,000 for each qualifying child.

You can claim the full amount per child if your income is up to $200,000 as a single filer or $400,000 for joint filers. If you earn more, the benefit phases out.

This is back to pre-2021 levels after two years of pandemic-related boosts that raised it to $3,000 per child or $3,600 for kids under 6.

Key Takeaways

Here's what you need to know: the Child Tax Credit is a $2,000-per-child benefit you claim by filing Form 1040 and attaching Schedule 8812.

Your dependent must be under 17 and have a Social Security number to qualify.

You get the full benefit if your income doesn't exceed $400,000 for joint filers or $200,000 for singles, and it phases out above that.

Up to $1,600 is refundable for 2023, going up to $1,700 in 2024.

How the Child Tax Credit Works

The Child Tax Credit reduces your taxes dollar-for-dollar, which is more valuable than a deduction that just lowers your taxable income.

You need a Social Security number for the child, and you claim it by filing Schedule 8812 with Form 1040.

Important Note on Refundability

The IRS has an online tool to check if your child qualifies. Remember, the credit is partially refundable via the Additional Child Tax Credit—if your credit exceeds your tax bill, you can get up to $1,600 back as a check in 2023, rising to $1,700 in 2024.

How to Claim the Child Tax Credit

If you have low income and think you don't need to file taxes because you owe nothing, that's a mistake—you might miss out on benefits like this.

Everyone but the very lowest earners must file, and if you have kids, the partially refundable Child Tax Credit means you could get money back even without owing taxes.

File Form 1040 and attach Schedule 8812 to calculate and claim your amount.

Child Tax Credit: Impact on Policy and Poverty

Since 1997, the Child Tax Credit has helped most working families, but it's been criticized for not reaching the poorest who don't file taxes.

The pandemic expansion had big effects, including advance payments and outreach to low-income families who don't usually file.

Amendments over time increased the amount and eligibility, but it long excluded the neediest until 2021's full refundability, which kept 3.7 million kids out of poverty in December 2021 and cut monthly child poverty by nearly 30%.

This isn't counted as earned income, so it doesn't affect benefits like unemployment, Medicaid, SNAP, SSI, or public housing.

The expansion came via the American Rescue Plan Act for COVID relief, fixing old issues but drawing criticism for cost and no work requirement. Democrats pushed it hard, and the Biden admin promoted it widely.

Who Is Eligible for the Child Tax Credit?

You and the child need Social Security numbers, and only one taxpayer can claim per dependent. The child must be under 17, provide no more than half their support, live with you half the year, and be your child, stepchild, sibling, stepsibling, half-sibling, or descendant.

What Are the Child Tax Credit Income Limits for the 2023 Tax Year?

Full credit for individuals up to $200,000 or joint filers up to $400,000; it phases out above that, possibly giving a partial credit.

How Do I Claim the Child Tax Credit?

Use Schedule 8812 with Form 1040; each child needs a Social Security number to qualify and calculate your amount.

The Bottom Line

For 2023, it's $2,000 per qualifying child or dependent. The CTC itself isn't refundable, but the ACTC makes up to $1,600 refundable in 2023 and $1,700 in 2024, so you can get it even if you owe no taxes. You must file a return to claim it.