The IRS Child Tax Credit

The IRS child tax credit (CTC) is used for a parent’s or parents’ federal income tax return for taxpayers who claim a child as a dependent. The child must meet eligibility conditions for the CTC to apply.

The “credit” acts as a way for the taxpayer to reduce their federal tax liability per qualifying child.

This tax credit is sometimes called an “exemption.” A related but different credit is the child and dependent care credit, which applies to certain childcare services.

For 2022, the CTC maximum was decreased from $3,600 in 2021 to $2,000—returning to 2019 levels—for each child under age six and $3,000.00 for each child between the ages of six and 17. The credit may be reduced based on annual household income.

A child must meet all of the following conditions to qualify the taxpayer for the credit:

1. The child is your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of them (for example, a grandchild, niece, or nephew).
2. The child was under the age of 17 at the end of the tax year.
3. The child did not provide over half of their own support for the entire tax year. 
4. The child lived with you for more than half of the tax year (but there are exceptions).
5. The child is claimed as a dependent on your return. 
6. The child does not file a joint return for the year (or files it only to claim a refund of withheld income tax or estimated tax paid).
7. The child is a U.S. citizen, U.S. national, or U.S. resident alien. 

If you have questions about whether your child qualifies you for the CTC or other federal income tax advice, speak with a tax attorney, tax or financial advisor, or a certified public accountant (CPA).

Yes. Adoption legally creates the parent-child relationship. Your adopted child will always be treated as your own child. If you are a U.S. citizen or U.S. national and your adopted child lived with you all year, as a member of your household, that child meets the condition to be a qualifying child for the CTC.

If you are already divorced or separated, read your court order. Your court order may state which parent can claim the child tax credit on their federal income tax return. Talk to a lawyer if you need help reading and understanding your current court order. 

If your court order does not say anything about the credit, you will have to determine if your child qualifies for the CTC. If you have questions about whether your child qualifies or other federal income tax advice, speak with a tax attorney, tax or financial advisor, or a CPA.

If one parent claims the CTC and the other parent believes they should not have, then the parents will have to take up the issue directly with the IRS. To do this, parents should have a certified copy of their court order. The IRS will want to see the court order to determine which parent can use the credit on any qualifying child.

Yes. As part of a divorce, suit affecting the parent-child relationship (SAPCR), or modification, parents can enter into several agreements concerning the child tax credit. Some of those agreements may:

1. Give one parent the exclusive right to the child tax credit,
2. Allow parents to alternate tax years to claim the child tax credit, or
3. Allow one parent to claim one child until the child no longer qualifies for the child tax credit, while the other parent does the same for another child.

Parents can reach these agreements through mediation or an informal agreement. While their case is pending, parents can enter into a Rule 11 agreement to address the child tax credit if the lawsuit is pending when federal tax returns are due. 

Eventually, any temporary agreement can also be included in the parents’ final order if they still agree. Parents should speak to a family law attorney about preparing and having these types of agreements in a court order.

The current IRS Form 8332 is available on the IRS website. Parents can use Form 8332 to do the following:

1. Release a claim to the child tax credit for your child so that the other parent can claim the credit for the child.
2. Revoke (take back) a previous release of claim to the credit for your child.

You should speak with a tax attorney, tax or financial advisor, or a certified public accountant (CPA) if you have more questions about IRS Form 8332.

Because the child tax credit is governed by federal law under the Internal Revenue Code, state court judges cannot make rulings or orders on which parent can use the child tax credit. 

In this case, without an agreement, the parents’ final court order will not say which parent can use the child tax credit.  

If you believe your child meets the IRS eligibility requirements for a qualifying child (see above), then you can claim that child on your federal income tax return. If you have questions about whether your child qualifies or other federal income tax advice, you should speak with a tax attorney, tax or financial advisor, or a CPA.

If a parent believes the other parent claimed the child tax credit when they should not have, the parents will have to work through that issue directly with the IRS. Make sure you have a certified copy of your final order that you can provide to the IRS.

The IRS should flag when a qualifying child is used on two different federal income tax returns. 

If a parent incorrectly claims a child for the child tax credit, then the IRS can and will make efforts to get any monies paid back from that parent. Make sure you know you can legally claim a child for the credit. If you have questions about whether your child qualifies or other federal income tax advice, you should speak with a tax attorney, tax or financial advisor, or a CPA.

Many parents have modified possession schedules that give both parents an equal amount of possession (visitation) with the child. This may include alternating weeks or splitting the week and weekends. 

This can be problematic if it turns out the child does not live with either parent for more than half of a tax year (see eligibility requirements for the credit above). 

If parents are agreeing to a modified schedule, they should also consider including an agreement on which parent can claim the child tax credit. An experienced family law attorney can help you with these types of agreements. You can also see the sample language above to include in your agreement.

Federal law (the Internal Revenue Code) governs the child tax credit, so state court judges cannot decide which parent can use the child tax credit. 

A parent can file an enforcement action or a breach of contract suit against the other parent for violating the agreement. A lawyer can help file the suit and tell you what remedies are available. You should also have a certified copy of your court order that contains the agreement, so you can show the IRS which parent should have had the right to claim the CTC.

Read Instructions for Schedule 8812, Credits for Qualifying Children and Other Dependents for more information from the IRS. You can also speak with a tax attorney, tax or financial advisor, or a certified public accountant (CPA).