Child Tax Credit (CTC)
The Child Tax Credit provides up to $2,200 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 and the claimant must have SSNs valid for employment; on a joint return, at least one spouse must meet the claimant SSN rule.
Exam Tip
CTC = $2,200/child under 17. Child and claimant employment-valid SSNs required; at least one spouse on a joint return. Refundable ACTC up to $1,700. Phase-out: $200K single, $400K MFJ. Due diligence penalty = $650 per failure for returns filed in 2026.
EA exam baseline: For the 2026–2027 SEE, use Tax Year 2025 and federal tax law through December 31, 2025. Later-year amounts below are explicitly labeled comparisons, not the default exam year. IRS SEE policy.
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 | $2,200 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 or fraction over threshold |
| Other dependents credit | $500 (non-refundable) |
Exam Alert
CTC = $2,200/child under 17 with SSN. ACTC refundable up to $1,700. Phase-out starts at $200K/$400K. Due diligence requirements apply (Form 8867) -- $650 penalty per failure on a 2025 return filed in 2026. The $500 Other Dependents Credit is for dependents who don't qualify for the full CTC.
2025 EA Exam Notes
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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 $8,046 with 3+ qualifying children. Taxpayers must have earned income, a valid SSN, and investment income no more than $11,950.
Due Diligence
In tax practice, due diligence includes required paid-preparer checks for specified tax benefits and filing status. In real estate, it 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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