What Is Publication 972: Child Tax Credit?

Publication 972 is a document published by the Internal Revenue Service (IRS) that provides guidance on determining the exact amount of the child tax credit that taxpayers can claim.

The document includes an update on any changes in the tax credit for the year, a worksheet to help taxpayers calculate their child credits in certain unusual cases, as well as instructions for determining the child tax credit to claim on Form 1040, and the amount of earned income to enter on Schedule 8812: Additional Child Tax Credit.

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Tax Deductions Vs. Tax Credits

Key Takeaways

  • Publication 972 explains one of America's most popular tax credits, the Child Tax Credit.
  • For 2020, the maximum credit per child is $2,000.
  • There are upper-income limits on eligibility for the credit.

Understanding Publication 972: Child Tax Credit

Most parents, foster parents, and guardians of children under age 17 can use the child tax credit to lower their taxable income for the year. This benefit can be claimed using Form 1040 or 1040NR.

Eligibility

IRS Publication 972, downloadable here, can be used to determine if a child is eligible. According to the document, a qualifying child or dependent must:

  • Be under the age of 17 by the end of the tax year;
  • Be claimed as a dependent on the taxpayer's federal tax return;
  • Be a U.S. citizen, resident alien, or national—more information on residency requirements can be found in IRS Publication 519;
  • Have lived with the taxpayer for more than half of the tax year; and
  • Not have provided more than half of their own financial support.

Credit Amount

Publication 972 also discloses how much credit a taxpayer can receive. In the 2020 tax year, the maximum amount that can be requested for a qualifying child is $2,000. That limit has been in effect since 2018, when the IRS doubled the $1,000 credit available on 2017 tax returns.

IRS Publication 972 provides a worksheet that can be used to determine the amount of child tax credit that can be claimed.

Refunds

Publication 972 provides guidance on potentially getting a portion of any unused credit refunded, too. Following changes to the law in 2017, the refundable portion of the child tax credit, known as the additional child tax credit (ACTC), increased to $1,400 from $1,000. This means low-income taxpayers whose credits exceed their tax liabilities can get refunded up to $1,400.

The IRS allows families with an annual income of more than $2,500 to request a refund using the ACTC. To make a claim for a refund, filers must complete Schedule 8812.

Special Considerations

The child tax credit has limits and is not available to taxpayers at certain high-income levels.

In 2020, the tax credit is reduced for single parents with an adjusted gross income (AGI) of $200,000. Meanwhile, for married couples filing jointly, eligibility is reduced at $400,000 and eliminated at $440,000.