How to Claim the Child Tax Credit

Parents deserve a bit of a (tax) break now and then.

As a busy parent, filing taxes can be found on the To-Do list between Monday’s soccer practice and Thursday’s parent-teacher conference. Do yourself a favor this year and see if you are eligible for the Child Tax Credit. Tax credits are great because, unlike deductions, they reduce your tax bill dollar-for-dollar. That means, a larger tax refund for you and your family!

What is the Child Tax Credit?

The Child Tax Credit offers a credit of up to $1,000 per child to qualifying taxpayers. It is only available to those who can claim a child as a dependent and meet several other requirements.

There is no limit to the number of children you can claim using the Child Tax Credit, however, claiming lots of kids may subject you to the Alternative Minimum Tax (AMT).

Who can claim the Child Tax Credit?

In order to claim the Child Tax Credit, the child in question must:

  • be your son, daughter, stepchild, foster child, adopted child, brother, sister, or a descendant of any of these
  • have lived with you for more than half the year
  • be under age 17 at the end of the year
  • not have provided more than half of his/her own support
  • be a citizen or resident alien of the United States
  • be younger than you
  • not file a joint return with his/her spouse (though there are exceptions)
  • meet the requirements to be claimed as your dependent
  • be claimed by his/her parents – if claimed by someone else, that person must have a higher AGI than either parent.

Are there income limitations?

The Child Tax Credit phases out beyond certain levels of income:

  • $55,000 for married couples filing separately
  • $75,000 for single, head of household, and qualifying widow(er)
  • $110,000 for married filing jointly

The credit is reduced by $50 for every $1,000 of income beyond these thresholds. Note that they are not indexed for inflation.

How much of the credit is refundable?

Generally if credits and deductions manage to reduce your tax liability to zero, you don’t receive the remaining amount as a refund. In other words, the best you can hope for is to break even – there’s no chance of making a profit from your tax return.

But if the Child Tax Credit helps reduce your tax liability to zero, the remaining amount is refunded to you in the form of the Additional Child Tax Credit. Exactly how much is refundable depends on how many kids you have and how much income you earn.

Taxpayers with one or two children can receive the smaller of:

  • the unused portion of the Child Tax Credit, or
  • 15% of your earned income over $3,000

Taxpayers with three or more children can receive the smaller of:

  • the unused amount or,
  • the larger of either
    • 15% of a person’s earned income over $3,000, or
    • the sum of Social Security and Medicare taxes paid minus the earned income credit

Cross off taxes on your To-Do list today!

Keeping track of all these IRS rules and regulations can get confusing. Thankfully RapidTax keeps things simple. Just enter your information into its online application and it will make sure you claim every cent of the Child Tax Credit that you deserve.

Easy, right? You’re done…just in time to get the kids off the bus!

Do you qualify to claim the child tax credit on your tax return this year?

 

48 Replies to “How to Claim the Child Tax Credit”

  1. I have 1 child, but only want to claim 1 on my w-4. Is this okay, or do I have to claim her? Also, if I do not claim her can I still receive the child tax credit?

    1. The child tax credit is directly associated with dependency, therefore if you are not claiming a dependent on your return, you cannot receive the child tax credit. Further, the IRS has a tool to help you determine how many allowances you should claim on your W-4 Form. Click here to use the IRS withholding calculator.

    1. Hi Perla,

      Your husband can claim your children as qualifying children dependents if all of the following IRS requirements are met:

      1. The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.

      2. The child must be (a) under age 19 at the end of the year and younger than you (or your spouse, if filing jointly), (b) under age 24 at the end of the year, a full-time student and younger than you (or your spouse, if filing jointly), (c) any age if permanently and totally disabled.

      3. The child must have lived with you for more than half of the year (except for temporary absences such as for school)

      4. The child must not have provided more than half of his or her support for the year.

      5. The child is not filing a joint return for the year (unless that return is filed only as a claim for refund).

      6. If the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child.

    1. Hi Bonny,

      The top portion of the W-4 form will not be submitted or viewed by the IRS so you have a bit of leeway when completing it. Since the actual amount of tax you owe for the year remains consistent, the W-4 form only determines when you will pay the tax; after filing or throughout the year. The more allowances you claim, the less income is withheld from your paychecks throughout the year. This means more take home pay with the probability higher that you will owe the IRS after filing. The less allowances you claim, the more income is withheld from your paychecks throughout the year. This will consist of less take home pay but a higher chance of being issued a refund after filing. You owe the IRS if too little is withheld throughout the year. You are issued a refund if too much is withheld.

      All of that being said, you can adjust your W-4 whenever you see it necessary. For example, if you are currently claiming 3 allowances and feel that too much is being withheld, then adjust your W-4 to claim 4 allowances.

  2. Hi. I had my son in September can I still claim and get some money back at all? Also if I let his grandmother claim instead will that mess up my taxes for 2017 if I decide to claim him then?

    1. Hi Ashley,

      A child must meet all of the following IRS requirements to be considered your qualifying child dependent:
      1. S/he must be your daughter, son, stepdaughter, stepson, foster child, sister, half-sister, brother, half-brother, step brother/sister, or a descendant of any of these (ie: niece or nephew).
      2. S/he must be younger than you.
      3. S/he must be under the age of 19 on the last day of the year OR a full-time student under the age of 24 on the last day of the year OR permanently disabled (regardless of age).
      4. S/he must not have provided more than 50% of their support for the year. Support includes food, housing, clothing, transportation, medical expenses, recreational expenses, etc.
      5. S/he must have lived with you for more than half of the year. The only exception is for temporary absences (ie: school, vacation, etc.).
      6. S/he must not file a joint tax return for the year (if they are married).
      7. You must be the person entitled to claim the child if more than one person has the option to do so.

      If you meet the above requirements, then you can claim your child. Only one person per year can claim a child on their return. If his grandmother claims him, then she will need to do so for the entirety of the year. This will not prevent you from claiming him on your 2017 tax return next year as long as you meet the qualifications to do so.

  3. I just wanted to know can a older sibling carry a younger sibling with the parents permission, and get a earned income tax credit, if the younger sibling is under the age of 18.

    1. Hi Deanna,

      You may be able to claim your sibling as a qualifying dependent if the following IRS requirements are met by you and/or your sibling:
      1. They are not filing a joint return with anyone else.
      2. They are not filing a tax return and claiming a dependent.
      3. Your AGI (adjusted gross income) must be higher than the AGI of the child’s parents (if they are also liable to claim the child).
      4. They are under the age of 19 on the last day of the year, or a full-time student under the age of 24 on the last day of the year, or permanently and totally disabled at any time during the year (regardless of age).
      5. They must have lived with you for more than half of the year.
      6. They cannot have provided more than 50% of their financial support for the year.
      7. They must be a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico for some part of the year.

      If your sibling qualifies as a dependent, then you are eligible to claim the Child Tax Credit or Earned Income Tax Credit as well IF you qualify based on those separate guidelines as well.

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