(Tax Year 2024 – Filed in 2025)
Overview
If you’re a W-2 employee with qualifying children, you may be eligible to claim the Child Tax Credit (CTC)—a powerful tax benefit that directly reduces your tax bill. For many families, it can mean a significant refund or a reduced balance owed.
For tax year 2024 (filed in 2025), the CTC remains a partially refundable credit, meaning it can reduce your tax liability even below zero in some cases.
Child Tax Credit Amounts for 2024
- Up to $2,000 per qualifying child under age 17
- Up to $1,600 of that amount may be refundable as the Additional Child Tax Credit (ACTC)
- Phases out at higher income levels:Â
- $200,000 for single filers
- $400,000 for married filing jointly
Eligibility Requirements
To qualify for the Child Tax Credit, the child must:
- Be under age 17 at the end of 2024
- Be your dependent and listed on your tax return
- Be a U.S. citizen, U.S. national, or U.S. resident alien
- Have a valid Social Security Number (SSN)
- Live with you for more than half the year
- Not provide more than half of their own financial support
You must also have earned income—W-2 income qualifies—to be eligible for the refundable portion of the credit.
How It Works With W-2 Income
If you are a W-2 employee:
- Your Box 1 wages from your Form W-2 count as earned income
- As long as your income is within the phaseout limits and your child qualifies, you can claim the credit
- If your tax liability is reduced to zero, you may qualify for a refundable portion via the Additional Child Tax Credit (ACTC)
Forms You Need
- Form 1040 – Main tax return
- Schedule 8812 – Used to calculate the Child Tax Credit and ACTC
Example Scenario
Ravi and Priya, a married couple with two children under age 17, earned $110,000 in combined W-2 income in 2024. Their W-2s show:
- Ravi: $65,000
- Priya: $45,000
They qualify for:
- $4,000 in total Child Tax Credit ($2,000 per child)
- Their tax liability is reduced accordingly
- If their tax owed is less than the credit, the unused portion may be refundable
Step-by-Step: How to Claim the Child Tax Credit
- Verify Child Eligibility
- Age, SSN, residency, dependency
- Check Your W-2 Income
- Confirm earned income meets IRS thresholds
- Complete Form 1040 and Schedule 8812
- Report qualifying children and calculate the credit
- Apply the Credit to Reduce Tax Due
- Any unused portion may qualify as a refund
- File Electronically or With a CPA
- Avoid errors and confirm maximum credit eligibility
What If You Have No Tax Liability?
If your tax due is already $0, you may still get a partial refund through the Additional Child Tax Credit, calculated based on your earned income over $2,500.
Conclusion
W-2 employees with qualifying children can take full advantage of the Child Tax Credit—up to $2,000 per child. Even if you don’t owe taxes, part of this credit may be refundable, making it one of the most valuable benefits available to working families. Be sure to review income limits, child qualifications, and file the proper forms.
Call to Action
Need help claiming the Child Tax Credit or filing Schedule 8812 properly? Schedule a meeting with Anshul Goyal, CPA EA FCA. He will ensure you claim the maximum credit legally allowed and file an accurate 2024 return.
Top 5 FAQs: Child Tax Credit and W-2 Income
Can W-2 employees claim the Child Tax Credit?
Yes. W-2 wages qualify as earned income for CTC eligibility.
Is the Child Tax Credit refundable?
Partially. Up to $1,600 per child may be refunded if the full credit exceeds your tax due.
What form is used to calculate the Child Tax Credit?
Schedule 8812, which accompanies Form 1040.
Do my children need Social Security Numbers?
Yes. Children must have valid SSNs to qualify.
What if I earn too much?
The credit phases out for incomes above $200,000 (single) or $400,000 (married filing jointly).
About Our CPA
Anshul Goyal, CPA EA FCA is a U.S.-licensed Certified Public Accountant and IRS-authorized Enrolled Agent. He provides tax planning, credit optimization, and full-service filing support to families, professionals, and Indian residents in the U.S.
Schedule a meeting with Anshul here:
https://calendly.com/anshulcpa/
Disclaimer
This article is for informational purposes only and should not be considered tax or legal advice. Please consult a qualified CPA for help specific to your tax situation.