What You Need to Know about CTC and ACTC

 

 

Here's what you need to know about the CTC, Child Tax Credit, and the refundable portion, the ACTC, Additional Child Tax Credit.

  • Know that the Child Tax Credit is up to $1,000 per child up to $3,000 is refundable as ACTC

 

  • Know who is a qualifying child. The child must:

     

    • Be under 17 at the end of the tax year
    • Meet the relationship and residency tests for uniform definition of a qualifying child, see Understanding What is a Qualifying Child
    • Not provide more than half of his or her own support for the tax year
    • Have lived with you for more than half of the tax year (see Publication 972, Child Tax Credit, for exceptions for birth or death during the year, temporary absences, kidnapped or missing or children of divorced or separated parents)
    • Be claimed as a dependent on your return
    • Not file a joint return for the year (or filed the joint return only to claim a refund)
    • Be U.S. citizen, U.S. National or a U.S. resident alien (see Publication 519, U.S. Tax Guide for Aliens, for more information)

     

  • Know the limits on the credit
    • One can't take the part of the CTC left after it reduces your tax to zero unless you qualify for the ACTC
    • The CTC is reduced if ones MAGI, modified adjusted gross income is above the amount listed below by filing status:
      • Married filing jointly - $110,000
      • Single, head of household or qualifying widow or widower--$75,000
      • Married filing separately - $55,000

 

  • Many people who qualify for the Earned Income Tax Credit also qualify for CTC and ACTC but know the important differences
    • For CTC, the qualifying child must be under age 17; the age limits for EITC are higher and there is no age limit for a child who is totally and permanently disabled
    • For EITC, the child must have a Social Security that is valid for employment but a child with an ITIN may qualify for CTC but must meet the substantial presence test, Be admitted for lawful permanent residence or make a first year election (see Instructions for Schedule 8812 for more information)

 

  • To claim the CTC for a child with an ITIN, one must complete Part I of the Schedule 8812 and one must complete Part II to IV to claim the ACTC

 

 

 

 

Find the latest news for refundable credits on Hot Topics for Refundable Credits

 

Protect your clients by knowing the questions to ask to help your client's get the most out of refundable credits.

 

Compare child related benefits at a glance on our Child-Related Tax Benefits Comparison chart

Forms and Publications

Publication 972, Child Tax Credit

Schedule 8812, Child Tax Credit

Instructions for Schedule 8812

Publication 4298, EITC, efile and Child Tax Credit Poster

What other resources do we have for you? Check out the EITC Central and Other Refundable Credits welcome page 

 

 

 Return to Other Refundable Credits Welcome page

MAGI, modified adjusted gross income, for most people is the amount of AGI, adjusted gross income, shown on your tax return. On Form 1040A, AGI is on line 22 and is the same as MAGI. If you file Form 1040, AGI is on line 38 and you add back the following:

  1. Foreign earned income exclusion,
  2. Foreign housing exclusion,
  3. Foreign housing deduction,
  4. Exclusion of income by bona fide residents of American Samoa, and
  5. Exclusion of income by bona fide residents of Puerto Rico.
Page Last Reviewed or Updated: 23-Apr-2014