The CTC is a federal tax credit that helps families with qualifying children reduce their federal income tax liability. For a complete list of video tutorials covering the child tax credit, please see our links below at the end of this post.

The child tax credit comprises two components:

  • The nonrefundable child tax credit (CTC); and
  • The refundable portion of the CTC, which is the Additional Child Tax Credit (ACTC).

The two terms often need clarification as taxpayers mistakenly believe these are separate tax credits. We will outline the rules and examples below.  

Who Qualifies for the CTC?

In order for a parent or legal guardian to claim the CTC for their qualifying child, the child must meet the following requirements:

  • Age Test. The child must be under 17 years old at the end of the tax year.
  • Relationship Test. The child must be the son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half-sister, half-brother, or a descendant of any of them, including grandchild, niece, and nephew.
  • Support Test. The child cannot have provided more than one-half of their own support during the tax year.
  • Dependent Test. The taxpayer must claim the child as a dependent on their Form 1040 (US Individual Income Tax Return).
  • Citizenship Test. The child is a U.S. citizen, a U.S. national, or a U.S. resident.
  • Residency Test. The child lived with the taxpayer more than half of the year. Temporary absences are okay.
  • Valid SSN. The qualifying child must have a valid SSN by the due date of the tax return.
What is the CTC Amount?

The CTC amount has changed over the years. For the 2023 tax year, the maximum CTC amount per qualifying child is $2,000. The maximum refundable portion of the CTC (i.e., the ACTC) is $1,600 per child.

Example CTC Amount with Phaseout for Income

Jane Doe and John Doe are married and have two children, both under 17 years of age. Jane and John are filing a married filing joint (MFJ) tax return, and their adjusted gross income (AGI) is $415,151 for the 2023 tax year. Jane and John claim the standard deduction of $27,700, which results in net taxable income of $387,451. Their total tax liability before credits is $81,147 (reported on Line 18 of Form 1040). With two qualifying children, they are eligible for a potential $2,000 CTC per child, for a total of $4,000.

Jane and John complete Form 8812 (Credits for Qualifying Children) and note that their combined income exceeds the MFJ threshold of $400,000 for 2023. Therefore, John and Jane must phase out their total CTC. Of the $4,000 CTC for the two children, John and Jane can claim $3,200 of the tax credit. The remaining $800 is lost.  

Please view our video here for a tutorial on this fact pattern and how to complete Form 8812 with Form 1040.

Example CTC Amount with Refundable ACTC

John Q Taxpayer is a single parent with one son, Alex, age 8. John’s total adjusted gross income (AGI) is $36,750 for the 2023 tax year, for which he owes $1,603 in taxes (Line 18 of Form 1040).

On John’s Form 8812, he completes Part 1, which shows he can use $1,603 of the credit as a nonrefundable portion to offset his total tax liability of $1,603. John then moves on to Part II-A to calculate what amount is available as an additional child tax credit (ACTC).

John calculates an ACTC amount of $397, which he reports on Form 1040 Line 28, to increase his federal tax refund.

Please view our video here for a tutorial on this fact pattern and how to complete Form 8812 with Form 1040.

Collection of CTC and ACTC Video Tutorials

The following CTC and ACTC videos are available on our channel:

Additional Information

Taxpayers seeking more information on child tax credits can visit the IRS website and the IRS Form 8812 instructions for CTC and ACTC. The IRS Publication 501 (Dependents, Standard Deduction, and Filing Information) contains guidance on which persons can be claimed as dependents on Form 1040.