What Is the Difference Between the Child Tax Credit and the Credit for Other Dependents?

2025-01-21
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Tax, Tax Planning
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Introduction

The Child Tax Credit (CTC) and the Credit for Other Dependents (COD) both provide tax relief for families and individuals who support dependents. However, these credits have different eligibility criteria, benefit amounts, and refundability rules.

This guide explains the differences between the CTC and COD, who qualifies for each credit, and how to claim them on Form 1040.

Tax Code References for the Child Tax Credit (CTC) and Credit for Other Dependents (COD) (IRC § 24 & § 152(d))

IRC § 24 defines the Child Tax Credit and the eligibility criteria.
IRC § 152(d) outlines the qualifications for other dependents who do not meet the CTC requirements.
IRS Publication 972 provides further guidance on the CTC and COD tax benefits.
Schedule 8812 (Credits for Qualifying Children and Other Dependents) is used to claim both credits.

Eligibility Requirements for the Child Tax Credit (CTC)

To qualify for the Child Tax Credit, the dependent must meet the following criteria:

Age Requirement: The child must be under 17 years old at the end of the tax year.
Relationship Requirement: The child must be the taxpayer’s biological child, stepchild, foster child, sibling, or descendant (e.g., grandchild, niece, nephew).
Residency Requirement: The child must live with the taxpayer for more than half the year.
Financial Support Test: The child cannot provide more than 50% of their own support.
Citizenship Requirement: The child must be a U.S. citizen, national, or resident alien with a valid Social Security Number (SSN).
Income Limitations:
The credit begins to phase out at $200,000 (Single/Head of Household) or $400,000 (Married Filing Jointly).

Eligibility Requirements for the Credit for Other Dependents (COD)

The Credit for Other Dependents (COD) applies to dependents who do not qualify for the Child Tax Credit. The eligible dependent must:

Be a U.S. citizen, national, or resident alien.
Have an Individual Taxpayer Identification Number (ITIN) or Social Security Number (SSN).
Be a qualifying relative (e.g., elderly parents, adult children, or other dependents who do not meet the CTC age requirement).
Live with the taxpayer for more than half the year or meet the support test.
Earn less than $4,700 in taxable income (for 2024 tax year).
Rely on the taxpayer for more than 50% of financial support.

Key Differences Between CTC and COD

Feature	Child Tax Credit (CTC)	Credit for Other Dependents (COD)
Age Requirement	Under 17 years old	Any age (if meets dependency rules)
Maximum Credit Amount	$2,000 per child	$500 per dependent
Refundable Portion?	Up to $1,600 per child (ACTC)	Non-refundable
Citizenship Requirement	Must have a valid SSN	SSN or ITIN required
Income Limits for Full Credit	$200,000 (Single) / $400,000 (MFJ)	No phase-out based on income

Schedule a Meeting

Tax Benefits of Each Credit

CTC can reduce taxes by up to $2,000 per child.
COD provides a $500 non-refundable credit for other dependents.
The Additional Child Tax Credit (ACTC) allows taxpayers to receive a refundable credit of up to $1,600 per child if the full CTC is not used.

Example Scenarios for Claiming CTC vs. COD

Example 1: Single Parent Claiming CTC for Two Young Children

Parent has two children, ages 8 and 12.
Earns $60,000 per year (below the phase-out threshold).
Eligible for $4,000 in Child Tax Credits ($2,000 per child).
Receives a refundable credit of $1,600 per child through the ACTC.

Example 2: Taxpayer Supporting Elderly Parent (COD Eligible)

Taxpayer supports their elderly mother, who earns only $3,500 per year.
Mother does not qualify for the CTC due to age but qualifies for the Credit for Other Dependents.
Taxpayer claims a $500 COD credit for supporting their mother.

Example 3: Grandparent Claiming a 19-Year-Old College Student

Grandparent supports a 19-year-old grandchild in college.
The grandchild does not qualify for the CTC (over 17) but meets COD criteria.
The taxpayer receives a $500 COD credit.

Step-by-Step Guide to Claiming CTC and COD on Form 1040

Step 1: Gather Dependent Information

Full legal name
Social Security Number (SSN) or ITIN
Proof of residency and financial support

Step 2: Determine Eligibility

If the dependent is under 17, claim the Child Tax Credit (CTC).
If the dependent is over 17 or does not meet CTC criteria, claim the Credit for Other Dependents (COD).

Step 3: Report Dependents on Form 1040

List all dependents in the “Dependents” section.
Check the appropriate box for CTC or COD eligibility.

Step 4: Complete Schedule 8812

Use Schedule 8812 to determine the refundable portion of the Child Tax Credit (if applicable).

Step 5: File Electronically for Faster Processing

E-file to speed up tax refunds and reduce IRS processing errors.

IRS Compliance Requirements

To ensure IRS compliance:

Maintain proof of financial support and residency for all dependents.
Verify SSNs or ITINs before filing to avoid IRS rejections.
Ensure only one taxpayer claims each dependent (to prevent duplicate claims).
Keep copies of tax returns and supporting documents for at least three years.

Improperly claiming a dependent or credit can result in IRS audits, tax penalties, and loss of future credit eligibility.

Conclusion

The Child Tax Credit (CTC) provides a larger tax benefit for families with children under 17, while the Credit for Other Dependents (COD) applies to older children, elderly parents, and other qualifying relatives. Understanding the differences helps taxpayers maximize deductions and avoid IRS errors.

For professional tax assistance, consult Anshul Goyal, CPA EA FCA, a Certified Public Accountant and tax compliance expert, to ensure proper filing and maximum tax benefits.

FAQs

1. Can I claim both the Child Tax Credit and the Credit for Other Dependents?
Yes, if you have both qualifying children and qualifying relatives.

2. Can I claim the Credit for Other Dependents for my spouse?
No, spouses cannot be claimed as dependents.

3. Is the Credit for Other Dependents refundable?
No, the COD is non-refundable and only reduces tax liability.

4. What if my dependent turns 17 during the tax year?
If the dependent turns 17 before December 31, they no longer qualify for the Child Tax Credit (CTC). However, they may still qualify for the Credit for Other Dependents (COD), which provides a $500 non-refundable credit.

5. Can I claim the Credit for Other Dependents for my adult child?
Yes, if your adult child is a full-time student under age 24 and you provide more than 50% of their support, you can claim them as a dependent and qualify for the Credit for Other Dependents (COD).

6. Can I claim the Child Tax Credit if I share custody of my child?
Only one parent can claim the Child Tax Credit per year. Generally, the custodial parent (the one with whom the child lives for more than half the year) claims the credit unless a court agreement allows the non-custodial parent to claim it.

7. What if my dependent earns income? Can I still claim them?
A dependent who earns income can still be claimed if they do not provide more than 50% of their own financial support. However, if they earn more than $4,700 in taxable income (for COD eligibility), they no longer qualify as a dependent for that credit.

8. Can I claim my grandchild for the Child Tax Credit?
Yes, as long as your grandchild meets all qualifying child criteria, including age, residency, financial support, and SSN requirements.

9. What happens if someone else claims my dependent?
If someone else incorrectly claims your dependent, the IRS will reject one of the returns. You may need to file a dispute with the IRS and provide proof of dependency, such as school records, medical documents, or legal agreements.

10. Can I claim both the Child Tax Credit and the Earned Income Tax Credit?
Yes, if you meet the income limits for the Earned Income Tax Credit (EITC), you can claim both credits for additional tax savings.

About Our CPA

Anshul Goyal, CPA EA FCA, is a Certified Public Accountant (CPA) in the United States, a licensed Enrolled Agent (EA) admitted to practice before the IRS, and a cross-border tax expert specializing in U.S. tax compliance.

With over 10 years of experience, he has successfully assisted U.S. taxpayers, expatriates, business owners, and Indian residents in navigating complex tax laws, deductions, and credits.