Tax glossary

Child Tax Credit

Child Tax Credit — what it means, how it works, and a real example, explained without the jargon.

What is Child Tax Credit?

The Child Tax Credit is worth up to $2,000 per qualifying child under 17, and part of it is refundable.

How it works

It reduces your tax dollar for dollar, and up to a set amount per child can be refunded if the credit exceeds your tax. It phases out once income passes $200,000 single or $400,000 married filing jointly.

A quick example

A married couple with two young kids and a $6,000 tax bill claims $4,000 in credits, cutting their tax to $2,000.

What people get wrong

The child must have a valid Social Security number and live with you more than half the year. Custody and residency details trip up divorced and separated parents most often.

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Frequently asked questions

What does Child Tax Credit mean?

The Child Tax Credit is worth up to $2,000 per qualifying child under 17, and part of it is refundable.

How does Child Tax Credit work?

It reduces your tax dollar for dollar, and up to a set amount per child can be refunded if the credit exceeds your tax. It phases out once income passes $200,000 single or $400,000 married filing jointly.

What's the most common mistake with child tax credit?

The child must have a valid Social Security number and live with you more than half the year. Custody and residency details trip up divorced and separated parents most often.