The Child Tax Credit: Who Qualifies and How Much You Can Get (2025 Guide)

Introduction

The Child Tax Credit (CTC) is a valuable tax benefit for families with dependent children, helping to reduce tax liability and, in some cases, provide a refund. The credit amount, income limits, and eligibility criteria change periodically based on tax laws. This guide explains who qualifies for the Child Tax Credit in 2025, how much you can claim, and how to apply it on your tax return.

What Is the Child Tax Credit? (IRC §24)

The Child Tax Credit (CTC) is a refundable or non-refundable credit that lowers the amount of taxes owed per qualifying child.

Key Benefits in 2025:

• Up to $2,000 per child under age 17 at the end of the tax year.
• Refundable portion up to $1,600 (Additional Child Tax Credit, ACTC).
• Subject to income phase-outs for high earners.

Who Qualifies for the Child Tax Credit? (IRC §24(c))

A child must meet all of the following criteria:

How Much Can You Claim? (IRC §24(a))

• $2,000 per qualifying child under 17.
• Refundable up to $1,600 (ACTC) if the credit exceeds tax liability.
• Phase-out reduces the credit by $50 per $1,000 of income above limits: 
  • Single: $200,000+
  • Married Filing Jointly: $400,000+

Example:

Lisa and John have two qualifying children and an AGI of $100,000.

• $2,000 × 2 = $4,000 total CTC applied to their tax bill.
• If they owe $3,000 in taxes, the CTC reduces it to $0, and they receive a $1,000 refund from the refundable portion.

Additional Child Tax Credit (ACTC) – Refundable Portion (IRC §24(d))

If the Child Tax Credit reduces your tax liability to zero, you may qualify for a refund of up to $1,600 per child under the Additional Child Tax Credit (ACTC).

How to Calculate ACTC:

• Refundable credit = 15% of earned income over $2,500, up to $1,600 per child.

Example:

Mark earns $30,000 and has one child.

• $30,000 – $2,500 = $27,500
• 15% of $27,500 = $4,125, but capped at $1,600 per child.
• Mark gets the full $1,600 ACTC refund.

How to Claim the Child Tax Credit

Step 1: Determine Eligibility

• Ensure your child meets the age, relationship, support, and residency tests.
• Check your AGI to see if you’re within the income limits.

Step 2: Gather Required Documents

• Social Security Number (SSN) for each child.
• Income documents (W-2, 1099, self-employment income records).

Step 3: Complete IRS Forms

• Use Schedule 8812 (Credits for Qualifying Children and Other Dependents) to calculate the credit.
• Report the credit on Form 1040, Line 19.

Step 4: File Your Tax Return

• Use tax software or consult a CPA for accuracy.

Conclusion

The Child Tax Credit provides families with valuable tax savings, reducing tax liability and offering potential refunds. Understanding the eligibility rules and filing correctly ensures you receive the full benefit.

Need help? Schedule a consultation with Anshul Goyal, CPA EA FCA to ensure you maximize your tax credits.

Disclaimer

This article is for informational purposes only and should not be considered tax, legal, or financial advice. Tax laws change frequently, and individual circumstances vary. Consult a qualified tax professional, such as Anshul Goyal, CPA EA FCA, before making any tax-related decisions.

FAQs

1. Can I claim the Child Tax Credit if I have no taxable income?
Yes, you may qualify for the Additional Child Tax Credit (ACTC), which is refundable even if you owe no taxes.

2. What happens if my child turns 17 during the tax year?
The Child Tax Credit is only available for children under 17 as of December 31, 2025.

3. Can I claim the credit if my child does not have a Social Security Number?
No, your child must have a valid SSN to qualify.

4. Is there a limit to how many children I can claim?
No, there is no limit—each qualifying child is eligible for up to $2,000 in credits.

5. What IRS form do I need to claim the Child Tax Credit?
Use Schedule 8812 (Credits for Qualifying Children and Other Dependents) and Form 1040.