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The US tax system offers various credits to help reduce the tax burden on individuals and families. One of the most significant credits for taxpayers with children is the Child Tax Credit (CTC). As tax laws can evolve, understanding the specifics for the 2025 tax year (which you’ll file in early 2026) is crucial.
This guide provides a clear overview of the Child Tax Credit for 2025, covering eligibility requirements, potential credit amounts, and the process for claiming it. Please note that tax laws can change, and this information is based on the rules and regulations known as of May 2025.
The Child Tax Credit is a non-refundable tax credit designed to help offset the costs of raising children. A “non-refundable” credit means it can reduce the amount of tax you owe to zero, but you generally won’t get any part of the credit back as a refund if it exceeds your tax liability.
However, a portion of the CTC can be refundable through the Additional Child Tax Credit (ACTC). This means that even if you don’t owe any income tax, you might still receive money back as a refund. We’ll explore this further below.
To claim the CTC for a child in the 2025 tax year, both the taxpayer (you) and the child must meet several criteria set by the Internal Revenue Service (IRS). A child must be your “qualifying child” based on the following tests:
The child must have been under the age of 17 (i.e., 16 or younger) at the end of the tax year (December 31, 2025).
The child must be your son, daughter, stepchild, foster child, brother, sister, half-brother, half-sister, stepbrother, stepsister, or a descendant of any of these individuals (e.g., grandchild, niece, nephew). An adopted child is always treated as your own child.
The child must have lived with you for more than half of the 2025 tax year. There are exceptions for temporary absences (like school, vacation, medical care, military service) and for children of divorced or separated parents. Specific rules apply for US citizens living abroad (see section below).
The child must not have provided more than half of their own financial support during the 2025 tax year.
The child must be a U.S. citizen, U.S. national, or U.S. resident alien.
Crucially, the child must have a valid Social Security Number (SSN) issued before the due date of your 2025 tax return (including extensions). A child with an ITIN (Individual Taxpayer Identification Number) or ATIN (Adoption Taxpayer Identification Number) does not qualify for the CTC. You, and your spouse if filing jointly, must also have an SSN or ITIN.
Your eligibility to claim the full credit amount depends on your Modified Adjusted Gross Income (MAGI). For the 2025 tax year, the credit begins to be reduced (phased out) if your MAGI exceeds:
The credit amount is reduced by $50 for each $1,000 (or fraction thereof) that your MAGI exceeds these thresholds.
For the 2025 tax year, the maximum Child Tax Credit amount is $2,000 per qualifying child.
While the main CTC is non-refundable, you might be eligible for the Additional Child Tax Credit (ACTC) if the CTC reduces your tax liability to zero before the full $2,000 per child is used. The ACTC allows you to receive a portion of the remaining credit as a refund.
For 2025, the maximum refundable amount per qualifying child through the ACTC is $1,700 (this amount is adjusted annually for inflation). However, the actual refundable amount you receive depends on your earned income. It’s generally calculated as 15% of your earned income exceeding $2,500, up to the $1,700 maximum per child.
Calculating the exact refundable portion can be complex and requires careful attention to IRS rules and formulas found on Schedule 8812.
Claiming the CTC and ACTC involves filing your U.S. federal income tax return correctly.
You must file Form 1040, U.S. Individual Income Tax Return, or Form 1040-NR, U.S. Nonresident Alien Income Tax Return, for the 2025 tax year. You cannot claim the credit if you file Form 1040-NR-EZ.
You will need to complete and attach Schedule 8812 (Credits for Qualifying Children and Other Dependents) to your Form 1040. This form is used to calculate both the non-refundable Child Tax Credit and the refundable Additional Child Tax Credit.
Ensure you accurately list your qualifying children, including their valid SSNs, and correctly calculate your MAGI and earned income. Errors can lead to delays in processing your return or incorrect credit amounts.
Claiming the CTC can have unique aspects for US citizens living abroad or families with international ties.
Generally, the child must live with you for more than half the year. For U.S. citizens living abroad, the IRS considers your main home to be in the United States for the entire year if you are a U.S. citizen who lives abroad or if you are a U.S. resident alien who is treated as a U.S. resident for tax purposes under a tax treaty. The child must have lived with you for more than half of the 2025 tax year. Consulting the IRS guidelines or a tax professional familiar with expat taxes is recommended to confirm eligibility based on your specific circumstances.
Remember, the requirement for the child to have a valid SSN issued before the tax filing deadline is strict. Children who are otherwise eligible but only have an ITIN cannot be claimed for the Child Tax Credit. This is a critical point for international families or those in the process of immigrating.
The Child Tax Credit can provide significant financial relief for families. However, ensuring you meet all eligibility requirements and accurately calculate and claim the credit is essential. Tax laws, thresholds, and amounts can change, so staying updated is vital.
Navigating US tax credits, especially with international elements or complex family situations, can be challenging. TheTaxBooks specializes in US tax filing for individuals, including US residents, non-residents, and expatriates living abroad. We can help ensure you claim all the credits you are entitled to, including the Child Tax Credit, accurately and efficiently.
To learn more about how you can reduce your taxes and save money, check out the helpful resources on our blog or contact us today to schedule a consultation.
