The child tax credit (CTC)

A tax break for parents and guardians

Derek Silva

By

Derek Silva

Derek Silva

Personal Finance Expert

Derek is a personal finance editor at Policygenius in New York City, and an expert in taxes. He has been writing about estate planning, investing, and other personal finance topics since 2017. He especially loves using data to tell a story. His work has been covered by Yahoo Finance, MSN, Business Insider, and CNBC.

Updated December 31, 2020|6 min read

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Update: The child tax credit was temporarily expanded for 2021 by The American Rescue Plan Act of 2021. For rules specific to the new child tax credit, read our guide to the 2021 child tax credit. The information below applies to tax years before 2021.

The child tax credit (CTC) is a tax break for parents and guardians with children under age 17 who have a Social Security number. The CTC is worth up to $2,000 per qualifying child, but you must fall within certain income limits. For your 2020 taxes, which you file in early 2021, you can claim the full CTC if your income is $200,000 or less ($400,000 for married couples filing jointly). You may still qualify for a partial credit if your income is above that limit.

There is a second part of the child tax credit, the credit for other dependents (ODC), that allows you to deduct up to $500 per dependent you have who doesn’t qualify for the child tax credit. You can claim the ODC if you care for an aging parent or if you pay to care for someone who doesn’t live with you.

If the child tax credit lowers the amount of annual income tax you owe below $0, causing you not to get the full credit you’re eligible for, you may be able to get a refund by taking the additional child tax credit (ACTC).

You can claim the child tax credit right on Form 1040 and don’t need to attach additional forms unless you claim the additional child tax credit, which requires Schedule 8812.

Key Takeaways

  • The child tax credit is worth up to $2,000 for each eligible child you have aged 16 or younger

  • The income limit to claim the full child tax credit is $400,000 for joint filers and $200,000 for all other filers

  • The child tax credit is combined with the credit for other dependents (ODC), which is worth up to $500 for each dependent you have who doesn’t qualify for the CTC

  • If the CTC brings your tax liability (how much you owe for the year) below $0, you can get a tax refund for the excess with the additional child tax credit (ACTC)

Who qualifies for the child tax credit?

The child tax credit is available to parents and guardians who pay to care for a child. You can qualify to claim it if you meet two main criteria:

  • You had a qualifying child

  • Your income is within the limits

Does my child qualify for the CTC?

Qualifying children must be under age 17 (meaning they must be 16 or younger) on the last day of the year; they must have lived with you for more than half of the year; and you must have paid for at least half the cost of their care.

The child must be a U.S. citizen, a U.S. national, or a resident alien. You cannot claim a child unless they have a Social Security number. You also need to claim the child as your dependent on your taxes, meaning not just for this one credit.

Finally, the child must have a certain relationship with you. The following children can qualify for the child tax credit:

  • Your son or daughter, including an adopted child

  • Stepchildren, stepbrothers, and stepsisters

  • Half brothers and half sisters

  • Foster children

  • Your grandchildren

  • Your nieces and nephews

  • A direct descendant of any of the above

Pro tip: Working parents and low-income families may also qualify for the earned income tax credit (EITC).

Child tax credit income limits

You must have at least $2,500 of earned income during the year in order to claim the child tax credit. Your modified adjusted gross income (MAGI) also needs to be within certain income limits. The maximum credit you can receive phases out once your income reaches $400,000 if you’re married filing jointly, or $200,000 if you use any other filing status. (Learn more about which filing status is best for you.)

Child tax credit income limits

Filing statusMaximum income for full credit
Single$200,000
Head of household$200,000
Married, filing jointly$400,000
Married, filing separately$200,000
Qualified widow(er)$400,000

The income limits above apply to your 2020 taxes, which you file in early 2021. The limits were lower before 2018 and were raised because of changes from the 2017 tax reform.

Once your income surpasses the limits, the CTC begins to phase out and eventually you do not qualify at all. There is a worksheet in the IRS instructions of Form 1040 to help you determine your exact credit amount. In general, joint filers can still claim a partial credit if their income is less than $80,000 (per child) more than the limit. A taxpayer with another filing status can get a partial child tax credit if their income is less than $40,000 (per child) over the limit. For example, a single filer with two qualifying children can likely still claim a partial credit if their income is less than $280,000.

Learn more in our complete guide to filing taxes.

How to claim the child tax credit

You can claim the child tax credit directly on your Form 1040. For 2020 taxes, which you need to file by Tax Day in 2021, the child tax credit is on line 19. If you need more time to file your taxes, you can apply for a six-month tax extension.

There are a few other forms you may need to complete before you can claim the CTC. These forms help determine your modified adjusted gross income, which you need to know before claiming the CTC:

  • Schedule 3, which considers multiple tax credits

  • Schedule R, if you are at least 65 years old or live with a permanent disability

  • Form 5695 for a credit related to making your home energy efficient

  • Form 8910, for new business vehicles you may have

  • Form 8936, if you bought a plug-in electric vehicle

The CTC is a nonrefundable credit, so if the final value of the credit is more than the total income tax you owe for the year, you cannot get a refund from it. However, you can still get the excess refund by claiming the additional child tax credit, which we discuss in a later section.

The Biden administration has proposed increasing the maximum CTC from $2,000 to $3,000 ($3,600 if you have children under age six) and making it a fully refundable credit, but those changes would affect your 2021 taxes, which you file in 2022. To learn more about changes that'll affect you this year, here's what you need to know about 2020 taxes.

The credit for other dependents (ODC)

The credit for other dependents (ODC) is a second part of the child tax credit, and it provides an income tax credit of up to $500 for each dependent you have who does not qualify for the child tax credit. On your tax return, the ODC is available on all the same forms as the child tax credit.

On your tax forms the ODC is combined with the CTC, and you can follow all of the information above in order to claim the ODC, with just a few exceptions. First, you can only claim the ODC for dependents who didn’t qualify for the CTC. There are no age limits and the dependent doesn’t have to live with you to qualify for the ODC. Dependents can also qualify if they have a Social Security number, Individual Taxpayer Identification Number (ITIN), or Adoption Taxpayer Identification Number (ATIN).

The additional child tax credit (ACTC)

If you claim the child tax credit and didn’t get the full credit that you qualified for because your tax liability reached $0, you can get the excess refunded to you with the additional child tax credit (ACTC). On IRS forms, you may see the ACTC referred to as the refundable portion of the child tax credit. (The CTC itself is not a refundable credit.)

The ACTC is only available if you claim the CTC and if you didn’t get the full credit you were entitled to. You cannot claim the ACTC if you (or your spouse if you file a joint tax return) had any income from outside of the U.S. (Form 2555). You also cannot claim the ACTC for dependents you used for the credit for other dependents.

The additional child tax credit is worth up to $1,400 per dependent.

How to claim the additional child tax credit

To claim the ACTC, first claim the child tax credit and credit for other dependents. Then, you must complete Schedule 8812, Additional Child Tax Credit.