| Purpose |
To reduce taxable income by claiming a qualifying individual as a dependent on your tax return.
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To reduce the amount of tax owed on a dollar-for-dollar basis by claiming a qualifying child.
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| Eligibility |
Dependents can be either a qualifying child or a qualifying relative, with specific requirements for each.
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Must be a qualifying child under the age of 17 at the end of the tax year.
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| Benefit |
Reduces taxable income by the exemption amount for each dependent, which can lower the overall tax liability.
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Provides a credit of up to $2,000 per qualifying child, which can directly reduce the amount of tax owed.
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| Income Limits |
There are no income limits for claiming a dependent, but the benefit may be phased out at higher income levels.
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The credit begins to phase out at modified adjusted gross income (MAGI) of $200,000 ($400,000 for married filing jointly).
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| Refundability |
Claiming a dependent is not a refundable benefit; it only reduces taxable income.
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Up to $1,400 of the Child Tax Credit is refundable as the Additional Child Tax Credit for those who owe less in taxes than the credit amount.
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| Impact on Other Credits/Deductions |
Claiming a dependent may make the taxpayer eligible for other benefits, such as the Earned Income Tax Credit, education credits, or dependent care benefits.
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The Child Tax Credit may be claimed in addition to other credits for which the taxpayer is eligible.
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| When to Use |
Use when you support a qualifying individual financially and meet the criteria for claiming them as a dependent.
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Use when you have a qualifying child and meet the criteria for the credit, including income thresholds and age limits.
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| Form to Use |
Claimed on Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, for seniors.
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Claimed on Schedule 8812 (Form 1040) and the credit is calculated as part of the Form 1040 or 1040-SR.
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| Additional Notes |
The Tax Cuts and Jobs Act (TCJA) of 2017 eliminated personal exemptions for tax years 2018 through 2025, changing the way dependents impact taxes.
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The Child Tax Credit was expanded under the TCJA, increasing the credit amount and the phase-out thresholds.
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