How does the Child Tax Credit work, and who is eligible?

Child Tax Credit Eligibility Criteria and Mechanics

Eligibility Criteria

To be eligible for the Child Tax Credit for the tax year 2023, taxpayers must meet the following conditions for each qualifying child:

1. Age Requirement

  - The child must be under age 17 at the end of the tax year.

2. Relationship to the Taxpayer

  - The child must be the taxpayer's son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of these (e.g., grandchild, niece, or nephew).

3. Support

  - The child cannot provide more than half of their own financial support during the year.

4. Residency

  - The child must have lived with the taxpayer for more than half of the tax year.

5. Dependent Status

  - The child must be properly claimed as the taxpayer's dependent on their tax return.

6. Filing Status

  - The child must not file a joint return with their spouse for the tax year unless it is only to claim a refund of withheld income tax or estimated tax paid.

7. Citizenship

  - The child must have been a U.S. citizen, U.S. national, or U.S. resident alien.

8. Social Security Number

  - The child must have a Social Security number that is valid for employment in the United States.

9. Income Thresholds

  - Taxpayers qualify for the full amount of the Child Tax Credit if their annual income is not more than $200,000, or $400,000 if filing a joint return. Partial credits may be available for those with higher incomes.

Mechanics of Claiming the Credit

To claim the Child Tax Credit, follow these steps:

1. Complete Form 1040

  - Enter the information for children and other dependents on Form 1040, U.S. Individual Income Tax Return.

2. Attach Schedule 8812

  - Attach a completed Schedule 8812, Credits for Qualifying Children and Other Dependents, to the tax return.

3. Check Eligibility

  - Use the IRS's Interactive Tax Assistant to verify eligibility for the credit.

4. Additional Credits

  - If eligible for the Child Tax Credit, also consider eligibility for other credits such as the Child and Dependent Care Credit, Earned Income Tax Credit, Adoption Credit, and Education Credits.

5. Audit and Denial Procedures

  - Be aware of the procedures to follow if the IRS audits the claim or denies the credit, and how to claim the credit if it was denied in the past.

Additional Information

- Taxpayers may also qualify for the Credit for Other Dependents for a child or dependent who is not a "qualifying child" for the purposes of the Child Tax Credit.

- It is important to keep accurate records and documentation to support the claim for the Child Tax Credit in case of an IRS audit.

For comprehensive information and assistance, taxpayers can access resources and tools provided by the IRS, including free tax preparation help and the option to choose a tax professional.

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Sources:

Publication 969 (2023), Health Savings Accounts and Other Tax-Favored ... 2024-08-03

Earned Income Tax Credit (EITC) | Internal Revenue Service 2024-08-03

Who Qualifies for the Earned Income Tax Credit (EITC) 2024-08-03

Streamlined filing compliance procedures | Internal Revenue Service 2024-08-03

Tax credits for individuals: What they mean and how they can help ... 2024-08-03

Child Tax Credit | Internal Revenue Service 2024-08-01

AOTC | Internal Revenue Service 2024-08-03

U.S. taxpayers residing outside the United States 2024-08-02

Credits and deductions under the Inflation Reduction Act of 2022 2024-08-03