Families ask about the Child Tax Credit more than any other credit on the return. The idea is simple: a credit for each qualifying child. The word that does all the work is qualifying, and the IRS applies several tests before a child counts. Here is how those tests work and what you should have with you when you file.
What the credit actually does
A credit is different from a deduction. A deduction lowers the income you are taxed on. A credit comes straight off the tax you owe, dollar for dollar. Part of the Child Tax Credit can also be refundable, which means that if the credit is larger than your tax, some of the difference can come back to you as a refund. That refundable part has its own name on the return, the Additional Child Tax Credit, and it depends on your earned income.
The dollar amounts are set by law and they change. We use the current-year figures when we prepare your return rather than quoting numbers here that may be out of date by the time you read them.
The tests a child has to meet
- Age: the child must be under the age limit at the end of the tax year. A child who turns 17 during the year generally no longer qualifies for this credit, although another credit for other dependents may apply.
- Relationship: your son, daughter, stepchild, foster child placed by an agency, sibling, step-sibling, or a descendant of any of them, such as a grandchild or niece.
- Residency: the child lived with you for more than half the year. Temporary absences for school, medical care or similar reasons still count as living with you.
- Support: the child did not provide more than half of their own support.
- Dependent: you claim the child as a dependent on your return, and the child does not file a joint return with someone else.
- Identification: the child must have a Social Security number that is valid for employment, issued before the return's due date. A child with only an ITIN does not qualify for this credit, though the credit for other dependents may apply.
- Citizenship: the child must be a U.S. citizen, national or resident alien.
When two people could claim the same child
This is where most of the trouble comes from. Separated parents, grandparents helping raise a child, and households where more than one adult supports the same kids all run into the same rule: only one return can claim a given child for this credit. If two returns claim the same child, both get flagged, and the IRS applies tie-breaker rules based on where the child lived and who had the higher income.
A custodial parent can release the claim to the other parent with a signed form. Without that form, the parent the child lived with for more nights during the year is the one who gets the credit. A divorce decree by itself does not override this.
If someone else in your family also plans to claim your child, settle it before either of you files. Two competing returns are much harder to fix afterward than one conversation beforehand.
What to bring
- 01Social Security cards for every child you plan to claim.
- 02Birth certificates or other proof of relationship if the child is not your own son or daughter.
- 03Something showing the child's address matched yours for most of the year: school records, medical records or a lease with the child's name.
- 04Your own income documents, since the refundable part depends on earned income.
- 05Any signed release form if you are the non-custodial parent claiming the child.
Frequently asked questions
My child was born in December. Do I get the credit for the whole year?
Yes. A child born at any point during the year is treated as having lived with you for the whole year, as long as the child has a Social Security number by the time the return is due.
My child has an ITIN, not a Social Security number. Is there anything?
Not this credit, but a separate credit for other dependents may apply. We check both when we prepare the return.
Why is my refund with this credit delayed every year?
Federal law requires the IRS to hold refunds that include the refundable child credit or the earned income credit until mid-February, even when the return is filed in January. It is not a problem with your return.
Come in and we will check it
Bring the children's documents and we will run every test before the return goes out. We work in English and Spanish at 700 C Andrews Hwy in Midland. Call (432) 257-7547.
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