What is a Child Tax Credit?

Definition of a Child Tax Credit

A child tax credit is a credit that is given to taxpayers for each dependent child that is under the age of 17 at the end of the tax year. This is a non-refundable credit that can reduce the taxpayer’s liability on a dollar-for-dollar basis. This credit is intended to provide an extra measure of tax relief for taxpayers who have qualifying dependents. A qualifying child must meet four criteria. The child must either be the taxpayer’s child or stepchild, foster child, sibling or step sibling, or a descendent of one of these; they must have the same principal residence as the taxpayer for at least half of the tax year; they must be under the age of 19 at the end of the tax year; and they must not be able to provide his or her own support for more than one-half of the tax year.

Example of a Child Tax Credit:

The child tax credit is non-refundable and because of this, it may only reduce the taxpayer’s liability to zero. This credit should not be confused with exemptions for dependency, which could be awarded for dependents that don’t qualify for this credit. The child tax credit could, however, be supplemented by the Additional Child Tax credit. 

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