Child Tax Credit


DEFINITION of 'Child Tax Credit'

A credit given to taxpayers for each dependent child that is under the age of 17 at the end of the tax year. The Child Tax credit is a nonrefundable credit that reduces the taxpayer's liability on a dollar-for-dollar basis. The Child Tax credit is intended to provide an extra measure of tax relief for taxpayers with qualifying dependents.


Loading the player...

BREAKING DOWN 'Child Tax Credit'

Because the Child Tax credit is nonrefundable, it can only reduce the taxpayer's liability to zero. It should not be confused with dependency exemptions, which may be awarded for dependents that do not qualify for this credit. However, it can also be supplemented by the Additional Child Tax credit.

  1. IRS Publication 972: Child Tax ...

    A document published by the Internal Revenue Service (IRS) that ...
  2. American Opportunity Tax Credit

    A tax credit that enabled more student and parents to pay for ...
  3. Provincial Parental Insurance Plan ...

    A Canadian tax deduction relating to taxes that are paid or payable ...
  4. Adoption Credit

    A federal tax credit that may be claimed by federal taxpayers ...
  5. Head Of Household

    A status held by the person in a household who is running the ...
  6. Exempt Income

    Certain types or amounts of income not subject to federal income ...
Related Articles
  1. Retirement

    Raising Grandchildren A Financial Feat

    Becoming a full-time caregiver again presents many challenges - including making ends meet.
  2. Taxes

    How To File Your Child's First Income Tax Return

    Use this quick parental guide to help your child learn the tax filing process and establish good habits.
  3. Taxes

    Taxing Times For Divorced Parents

    Find out how to deal with the tax issues that arise for divorced parents with dependent children.
  4. Taxes

    How To Claim A Dependent On Your Tax Return

    If you are a caregiver, get to know the rules for claiming a dependent before filing your taxes.
  5. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  6. Options & Futures

    Budgeting For A New Baby

    This little member of your family will be a big expense. Find out what you need to budget for and how to save.
  7. Budgeting

    How to Cost Effectively Spend on Baby Clothes

    Don't let your baby's wardrobe derail your budget. These top tips help you to save money and spend wisely on baby clothes.
  8. Budgeting

    Key Questions to Ask Before Moving in Together

    Moving in together is a big step. Here are some key financial questions to ask your partner before you make the move.
  9. Personal Finance

    Avoid These 5 Financial Mistakes in a Divorce

    To ensure you get what's rightfully your's in a divorce, avoid these financial mistakes.
  10. Investing

    5 Ways to Reduce Your Taxes After a Windfall Gain

    Windfall income is a welcome padding to any bank account, but plan for the government's share before you start spending.
  1. What is the difference between a write-off and a deduction?

    There is no difference between a tax write-off and a tax deduction. It's possible that the confusion arises between a tax ... Read Full Answer >>
  2. How do I sign up for the saver's tax credit?

    The saver's tax credit is a non-refundable tax credit available to eligible taxpayers in the U.S. who make contributions ... Read Full Answer >>
  3. How can I use a child tax credit?

    You may be able to reduce the amount of taxes you owe by up to $4,000, by claiming the child tax credit of up to $1,000 ... Read Full Answer >>
  4. Why is the Cayman Islands considered a tax haven?

    The Cayman Islands is one of the most well-known tax havens in the world. Unlike most countries, the Cayman Islands does ... Read Full Answer >>
  5. Why is Luxembourg considered a tax haven?

    Luxembourg has been the tax haven of choice for many corporations and mega-rich individuals around the world since the 197 ... Read Full Answer >>
  6. Why is Panama considered a tax haven?

    The Republic of Panama is considered one of the most well-established pure tax havens in the Caribbean due to extensive legislation ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  2. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  3. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  4. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  5. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  6. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!