What the Child Tax Credit Does

The Child Tax Credit is a reduction in the federal income tax you owe, not a refund or a payment. For each child under 17 who meets the requirements, you subtract a set amount from your total tax bill. The amount changes year to year — it was $2,000 per child for the 2023 tax year, but Congress can adjust it. If the credit brings your tax bill below zero, you may receive the difference as a refund, but that depends on which version of the credit you claim.

The credit is not automatic. You claim it on your tax return by listing each child's name, date of birth, and Social Security number. The IRS then verifies that the child meets the rules and reduces what you owe.

Key Takeaways

  • The Child Tax Credit reduces your federal tax bill by $2,000 per may have access to child under 17 for the 2023 tax year, though this amount can change.
  • You must claim the credit on your tax return; it does not happen automatically even if you have children.
  • The child must have a valid Social Security number, live with you for more than half the year, and be a U.S. citizen, national, or resident alien.
  • If your income exceeds a threshold that varies by filing status, the credit begins to shrink by $50 for every $1,000 over the limit.
  • Some families may receive part of the credit as a refund if they owe little or no tax, depending on the rules in effect that year.

Who Can Claim the Credit

You can claim the Child Tax Credit for a child if you meet all of these conditions: the child is your son, daughter, stepchild, foster child, sibling, or a descendant of any of these (such as a grandchild or niece); the child was under 17 at the end of the tax year; the child lived with you for more than half the tax year; you provided more than half the child's financial support during the year; and the child is a U.S. citizen, national, or resident alien with a valid Social Security number.

The child cannot be claimed by more than one person in the same year. If parents are divorced or separated, the parent with primary custody usually claims the credit, but the other parent can claim it if the custodial parent signs a form releasing the right to claim.

You must also meet income limits. For the 2023 tax year, the credit begins to reduce if your modified adjusted gross income (MAGI) exceeds $400,000 for married couples filing jointly, $200,000 for single filers, and $200,000 for heads of household. The credit shrinks by $50 for every $1,000 (or fraction thereof) above your threshold.

How Much You Receive

The credit amount per child is set by Congress and changes periodically. For 2023, it was $2,000 per child under 17. For 2024, it remains $2,000, but this can shift in future years if new tax law passes.

The actual benefit depends on how much tax you owe. If you owe $3,000 in federal income tax and have two may have access to children, the $4,000 credit wipes out your $3,000 bill. What happens to the remaining $1,000 depends on the rules in place that year. In some years, you receive it as a refund (called the refundable portion). In other years, you lose it (called the nonrefundable portion). The refundable portion has been limited to $1,600 per child in recent years, but this changes when Congress acts.

How to Claim the Credit on Your Tax Return

You claim the Child Tax Credit by filling out your federal tax return, whether you file on paper or electronically. If you use tax software or a tax preparer, they will ask you for each child's information and calculate the credit for you.

You will need: each child's full legal name, date of birth, and Social Security number; your relationship to the child; and confirmation that the child lived with you for more than half the year. If you are filing jointly with a spouse, both of you sign the return, but only one Social Security number goes on the form as the primary taxpayer.

You do not need to submit extra documents with your return unless the IRS requests them. However, keep records showing the child lived with you (such as school enrollment, medical records, or lease agreements) in case the IRS asks to verify your claim.

Income Limits and Phase-Out Rules

The credit does not disappear entirely if you earn above the income threshold — it shrinks gradually. For 2023, if you are married filing jointly and your MAGI is $400,000, you receive the full credit. If your MAGI is $401,000, the credit reduces by $50. If your MAGI is $402,000, it reduces by another $50, and so on.

The phase-out is calculated in $1,000 increments, meaning even $1 over a $1,000 threshold triggers the full $50 reduction. This can add up quickly for higher-income families. For example, a married couple with MAGI of $420,000 and two children would lose $1,000 from their $4,000 credit (20 increments × $50), leaving them with a $3,000 credit.

Your MAGI for this purpose is usually your adjusted gross income (AGI) from your tax return, but certain types of income are added back in. Your tax software or preparer will calculate this for you.

When the Credit Appears as a Refund

In some tax years, part of the Child Tax Credit is refundable, meaning you can receive money back even if you owe no tax. This is called the Additional Child Tax Credit or Refundable Child Tax Credit, depending on the year.

The refundable portion has varied. For 2023, up to $1,600 per child could be refunded if you earned at least $2,500 during the year. Families with very low income may receive a smaller refund. The rules change when Congress passes new tax law, so the refundable amount and income thresholds are different in other years.

You do not apply for the refundable portion separately — it is calculated automatically when you file your return. If you are due a refund, the IRS sends it to you by mail or direct deposit, depending on how you filed.

Changes to the Credit and Future Years

The Child Tax Credit has changed multiple times in recent years. In 2021 and 2022, Congress temporarily increased the credit to $3,000 per child (or $3,600 for children under 6) and made more of it refundable. That expansion ended after 2022, and the credit returned to $2,000 per child for 2023 and 2024.

Congress can change the credit amount, income limits, and refundable portion at any time. Tax law does not automatically renew — it requires a new vote. Before filing your return each year, check the current year's rules, as they may differ from the previous year. The IRS website and your tax software will reflect the rules in effect for that tax year.

Frequently Asked Questions

Can I claim the credit if my child does not have a Social Security number?

No. Your child must have a valid Social Security number to claim the credit. If your child was born in the U.S. but does not yet have a number, you can request one from the Social Security Administration before filing your return. If your child is not a U.S. citizen or resident alien, you cannot claim this credit for them.

What if I share custody with the other parent?

The parent with primary custody (who the child lives with for more than half the year) can claim the credit. If you and the other parent split custody equally, the parent with the higher income usually claims it, but you can agree otherwise. The other parent must sign IRS Form 8332 releasing their right to claim the child, and you attach it to your return.

Do I lose the credit if I earn too much money?

You do not lose it entirely, but it shrinks. For 2023, the credit begins to reduce if your income exceeds $400,000 (married filing jointly) or $200,000 (single). For every $1,000 over the limit, the credit drops by $50 per child. High-income families may still receive a partial credit.

Can I claim the credit for my grandchild or foster child?

Yes, if the grandchild or foster child meets all the other rules: they lived with you for more than half the year, you provided more than half their support, they have a valid Social Security number, and they are a U.S. citizen, national, or resident alien. You must also be their primary caregiver and claim them as a dependent on your return.

What happens if I claim the credit and the IRS says I was not may have access to to it?

The IRS will send you a notice explaining why and ask you to repay the credit. You can respond to the notice with documentation (such as birth certificates or school records) showing the child met the rules. If you disagree with the IRS decision, you have the right to appeal through the IRS dispute process.