How does the Child Tax Credit work?

Section 24 of the Internal Revenue Code allows taxpayers to take a credit against their tax liability, that is, a dollar-for-dollar reduction in the amount of tax they owe for each qualifying child they claim as a dependent. This is known as the Child Tax Credit or CTC.

The amount of the credit and the extent to which it is refundable sometimes changes from tax year to tax year. Most recently in 2025 it is set to be $2000 per child, with up to $1700 being refundable.

In order to be eligible to claim the Child Tax Credit several criteria must be met.

1. The child must be related to the tax payer. Possible relations include the taxpayer’s child, grandchild, sister, brother, niece, nephew, or descendent of one of those. It also includes step-children, adopted children, and children in foster care.

2. The child must reside with the taxpayer for more than half of the year. In the case of

divorce, separation, or other circumstance in which two or more adults share custody of the child, the child tax credit goes to whichever taxpayer the child resided with for the longest period of the year. If the child resided with all the taxpayers equally, the tax credit is awarded to the taxpayer with the highest adjusted gross income.

3. The child must be under 17 years of age.

4. The child must not have provided half of his own support during the year. This means

that a 16-year-old who is employed and pays for part of his or her living expenses may be ineligible to be claimed.

If you believe you were wrongfully denied the child tax credit, believe you are titled to refund, or have any other questions or concerns regarding the child tax credit please do not hesitate to give us a call at 301-250-0257.