Eligibility, claiming process, and additional details for the Child Tax Credit
The Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC) are federal tax breaks designed to help families with the costs of raising children. In 2025, taxpayers can cut their tax bill by up to $2,200 for each qualifying dependent under age 17, with the possibility of receiving up to $1,700 per qualifying child as a refund, even after tax bill has been reduced to zero.
Eligibility for the Child Tax Credit and Additional Child Tax Credit
To qualify for the CTC and ACTC, several criteria must be met. The child must be your son, daughter, stepchild, foster child, sibling, stepsibling, grandchild, niece, or nephew and must be under 17 at the end of the tax year. The child must have lived with you for more than half the tax year, and you must provide more than half of the child’s support for the year. The child must also be a U.S. citizen, national, or U.S. resident alien with a valid Social Security number issued by the due date of the return.
Beginning in 2025, the taxpayer claiming the credit must also have a valid Social Security number (or at least one spouse on a joint return). Additionally, there is a minimum earned income requirement of $2,500 for the ACTC, and the CTC must be unsatisfied, meaning that the CTC exceeds your tax liability.
Calculation of the Additional Child Tax Credit
If you meet the eligibility requirements, the ACTC may be refundable, allowing you to receive the credit even if you do not owe federal income tax. The ACTC is typically calculated as follows:
- Determine the Regular CTC: The maximum regular CTC per qualifying child is $2,000, subject to income phase-outs for higher earners.
- Subtract Regular CTC Used Against Tax Liability: The ACTC is the portion of the CTC that cannot be used to offset tax liability (i.e., the “unused” CTC).
- Apply Refundable Portion: The refundable portion of the ACTC is up to $1,700 per qualifying child for 2025.
- Earned Income Test: The refundable amount is based on 15% of your earned income above $2,500, but cannot exceed the $1,700 per child cap.
- Submission: File Form 1040 or 1040-SR and attach Schedule 8812 to claim the ACTC.
State Child Tax Credits
State-level additional child tax credits vary by state, and there is no single “state additional child tax credit” that all states follow. Some states may piggyback on federal qualifications, while others have their own eligibility rules and calculation methods. It is essential to check your state’s tax agency directly for the most accurate and up-to-date information, as state programs change frequently and are not covered by federal guidelines.
Key Points
- Eligibility for the federal ACTC is stringent and requires a valid Social Security number for both the child and the claiming taxpayer starting in 2025, a minimum earned income, and that the child meets all CTC criteria.
- The federal ACTC calculation is based on 15% of earned income above $2,500, up to a $1,700 cap per qualifying child.
- State credits are not uniform and must be checked individually for eligibility, calculation, and refundability.
- Direct IRS and state tax agency resources are the best sources for the latest, jurisdiction-specific details.
Always consult a tax professional or official government resources for your specific situation, especially regarding state child tax credits. The IRS Schedule 8812 is used to determine the amount of the child tax credit and any refundable portion (additional child tax credit). The new law requires that the parent claiming the child tax credit must have a Social Security number (if married filing jointly, one spouse must have a Social Security number). The additional child tax credit is calculated at 15 percent for every dollar of earned income starting at $2,500. The child tax credit value will increase from $2,000 to $2,200 in 2025. The child tax credit is aimed at helping families defray the costs of raising children. Eligibility and benefits for state child tax credits vary, so check with your state tax website for details.
To maximize personal-finance benefits, families with qualifying children should be aware of the eligibility requirements for the Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC). The CTC and ACTC can offer taxpayers up to $2,200 per qualifying dependent under age 17 in 2025, with the potential to receive up to $1,700 per qualifying child as a refund, even after the tax bill has been reduced to zero. However, careful consideration is necessary as the federal ACTC eligibility is stringent and requires a valid Social Security number for both the child and the claiming taxpayer starting in 2025, a minimum earned income, and that the child meets all CTC criteria. Additionally, state child tax credits have their own eligibility rules, calculation methods, and change frequently, so it is essential to consult your state's tax agency directly for the most accurate and up-to-date information.
