Child Tax Credit (CTC)
The Child Tax Credit provides up to $2,000 per qualifying child under age 17. The credit phases out at $200,000 AGI (single) and $400,000 (MFJ). The refundable portion (Additional Child Tax Credit/ACTC) is up to $1,700. The child must have a valid Social Security number.
Exam Tip
CTC = $2,000/child under 17. SSN required (not ITIN). Refundable ACTC up to $1,700. Phase-out: $200K single, $400K MFJ. Due diligence penalty = $560.
What is the Child Tax Credit?
The CTC reduces tax liability dollar-for-dollar for each qualifying child. It has both non-refundable and refundable components.
2025 CTC Requirements
| Requirement | Details |
|---|---|
| Age | Under 17 at end of tax year |
| Relationship | Son, daughter, stepchild, foster child, sibling, or descendant |
| Residency | Lived with taxpayer 50%+ of year |
| Support | Child did not provide over 50% of own support |
| SSN | Must have valid SSN (not ITIN) |
| Citizenship | Must be US citizen, national, or resident alien |
Credit Amounts and Phase-Outs
| Component | Amount |
|---|---|
| Maximum CTC | $2,000 per child |
| Refundable portion (ACTC) | Up to $1,700 |
| Phase-out (single) | Begins at $200,000 AGI |
| Phase-out (MFJ) | Begins at $400,000 AGI |
| Phase-out rate | $50 per $1,000 over threshold |
| Other dependents credit | $500 (non-refundable) |
Exam Alert
CTC = $2,000/child under 17 with SSN. ACTC refundable up to $1,700. Phase-out starts at $200K/$400K. Due diligence requirements apply (Form 8867) -- $560 penalty per failure. The $500 Other Dependents Credit is for dependents who don't qualify for the full CTC.
Study This Term In
Related Terms
Dependent
A dependent is a person who meets the qualifying child or qualifying relative tests and can be claimed on another taxpayer's return. Claiming a dependent provides eligibility for various credits, deductions, and favorable filing status.
Earned Income Tax Credit (EITC)
The Earned Income Tax Credit (EITC/EIC) is a refundable tax credit for low-to-moderate income workers. The maximum credit for 2025 is $7,830 with 3+ qualifying children. Taxpayers must have earned income, a valid SSN, and investment income below $11,600.
Due Diligence
Due diligence is the investigation period in a real estate transaction during which buyers thoroughly examine the property, review documents, and verify all aspects of the purchase before finalizing the deal.
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