Child Tax Credit, ACTC, and ODC

1 What This Covers
2 Child Tax Credit (CTC):
3 Qualifying Requirements:
4 Income Limits and Phase-out:
5 Additional Child Tax Credit (ACTC):
6 Other Dependent Credit (ODC):
7 Claiming in the Software:

What This Covers

Eligibility rules, income limits, and how to claim the Child Tax Credit (CTC), Additional Child Tax Credit (ACTC), and Other Dependent Credit (ODC) on a return.

Child Tax Credit (CTC):

The CTC is a nonrefundable credit for families with dependent children under age 17. It can reduce your client's tax to zero, but any unused amount does not carry over as a refund. If the credit exceeds your client's tax liability, they may qualify for the ACTC instead.

Qualifying Requirements:

Your client's dependent must meet all of the following:

Age: Under 17 at the end of the tax year.
Dependent status: Claimed as a dependent on the return.
Relationship: Your client's child, stepchild, sibling, or a descendant of any of these; or a foster child placed by an authorized agency.
Citizenship: U.S. citizen, U.S. national, or U.S. resident.
Financial support: The child did not provide more than half of their own support.
Residency: Lived with your client for more than half the tax year. Exceptions apply for divorced or separated parents.
Filing status: Did not file a joint return, except to claim a refund of withheld or estimated taxes.
SSN: Has a valid Social Security number issued before the return due date.

Income Limits and Phase-out:

The credit reduces by $50 for every $1,000 (or fraction) of modified AGI above:

$200,000 for Single, Head of Household, or Married Filing Separately
$400,000 for Married Filing Jointly

Additional Child Tax Credit (ACTC):

The ACTC is the refundable portion of the CTC. If your client owes little or no tax, they may still benefit from filing to claim it. The same eligibility rules apply, plus your client's earned income must exceed $2,500.

Other Dependent Credit (ODC):

The ODC is a $500 nonrefundable credit for dependents who do not qualify for the CTC. Consider it when your client's dependent is 17 or older at the end of the tax year. It can be claimed alongside the Child and Dependent Care Credit and the Earned Income Credit.

Claiming in the Software:

The CTC is not added to the return automatically. Enter the dependent's information and confirm eligibility; the software calculates the credit and indicates whether the child qualifies. Report the credit on Form 1040 with Schedule 8812.