Who Gets the Child Tax Credit?

The Child Tax Credit is a credit given to taxpayers who have dependent children under the age of 17. This credit is nonrefundable and reduces the liability of the taxpayer dollar for dollar. The goal is to provide some extra tax relief for individuals with qualifying dependents.

A nonrefundable credit can only decrease a taxpayer’s liability to zero; it cannot result in a refund. In cases when the tax credit is larger than the liability the unused portion is refundable as the Additional Child Tax credit. Just how much is refundable depends upon the degree of income earned and specific circumstances relating to Social Security and Medicare taxes paid.

Currently the credit is $1,000 per child, although there is a provision to decrease it. The Child Tax Credit can only be claimed by families which make less than $130,000 per year. After $110,000 the credit phases out at 5 cents for each dollar made above $110,000.

Proponents argue that in developed countries where the birth rate is low, the income credit might encourage an increase in native population. On the other hand, opponents argue that the income threshold leaves out many families which qualify as middle class. They further argue that the encouragement to have more children in order to qualify for further credits may create challenges paying for college.

In addition to the income limits imposed by the tax law there are a number of tests that the child in question must pass in order to qualify. Citizenship, relationship, dependency, support and residence all play a part in determining whether or not the credit can be claimed.

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