26 USC 24 - Child tax credit

View all text of Subpart A [§ 21 - § 26]

§ 24. Child tax credit

(a) Allowance of credit

(b) Limitations

(1) Limitation based on adjusted gross income

(2) Threshold amountFor purposes of paragraph (1), the term “threshold amount” means—

(A) $110,000 in the case of a joint return,

(B) $75,000 in the case of an individual who is not married, and

For purposes of this paragraph, marital status shall be determined under section 7703.

(1) In general

(2) Exception for certain noncitizens

(d) Portion of credit refundable

(1) In generalThe aggregate credits allowed to a taxpayer under subpart C shall be increased by the lesser of—

(A) the credit which would be allowed under this section without regard to this subsection and the limitation under section 26(a) or

(B) the amount by which the aggregate amount of credits allowed by this subpart (determined without regard to this subsection) would increase if the limitation imposed by section 26(a) were increased by the greater of—

(i) 15 percent of so much of the taxpayer’s earned income (within the meaning of section 32) which is taken into account in computing taxable income for the taxable year as exceeds $3,000, or

(ii) in the case of a taxpayer with 3 or more qualifying children, the excess (if any) of—(I) the taxpayer’s social security taxes for the taxable year, over(II) the credit allowed under section 32 for the taxable year.

The amount of the credit allowed under this subsection shall not be treated as a credit allowed under this subpart and shall reduce the amount of credit otherwise allowable under subsection (a) without regard to section 26(a). For purposes of subparagraph (B), any amount excluded from gross income by reason of section 112 shall be treated as earned income which is taken into account in computing taxable income for the taxable year.

(2) Social security taxesFor purposes of paragraph (1)—

(A) In generalThe term “social security taxes” means, with respect to any taxpayer for any taxable year—

(i) the amount of the taxes imposed by sections 3101 and 3201(a) on amounts received by the taxpayer during the calendar year in which the taxable year begins,

(ii) 50 percent of the taxes imposed by section 1401 on the self-employment income of the taxpayer for the taxable year, and

(iii) 50 percent of the taxes imposed by section 3211(a) on amounts received by the taxpayer during the calendar year in which the taxable year begins.

(B) Coordination with special refund of social security taxes

(3) Exception for taxpayers excluding foreign earned income

(e) Identification requirements

(1) Qualifying child identification requirement

(2) Taxpayer identification requirement

(f) Taxable year must be full taxable year

(g) Restrictions on taxpayers who improperly claimed credit in prior year

(1) Taxpayers making prior fraudulent or reckless claims

(A) In general

(B) Disallowance periodFor purposes of subparagraph (A), the disallowance period is—

(i) the period of 10 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of credit under this section was due to fraud, and

(ii) the period of 2 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of credit under this section was due to reckless or intentional disregard of rules and regulations (but not due to fraud).

(2) Taxpayers making improper prior claims

(h) Special rules for taxable years 2018 through 2025

(1) In general

(2) Credit amount

(3) Limitation

(4) Partial credit allowed for certain other dependents

(A) In general

(B) Exception for certain noncitizens

(5) Maximum amount of refundable credit

(A) In general

(B) Adjustment for inflationIn the case of a taxable year beginning after 2018, the $1,400 amount in subparagraph (A) shall be increased by an amount equal to—

(i) such dollar amount, multiplied by

(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “2017” for “2016” in subparagraph (A)(ii) thereof.

If any increase under this clause is not a multiple of $100, such increase shall be rounded to the next lowest multiple of $100.

(6) Earned income threshold for refundable credit

(7) Social security number requiredNo credit shall be allowed under this section to a taxpayer with respect to any qualifying child unless the taxpayer includes the social security number of such child on the return of tax for the taxable year. For purposes of the preceding sentence, the term “social security number” means a social security number issued to an individual by the Social Security Administration, but only if the social security number is issued—

(A) to a citizen of the United States or pursuant to subclause (I) (or that portion of subclause (III) that relates to subclause (I)) of section 205(c)(2)(B)(i) of the Social Security Act, and

(B) before the due date for such return.

(i) Special rules for 2021In the case of any taxable year beginning after December 31, 2020, and before January 1, 2022—

(1) Refundable creditIf the taxpayer (in the case of a joint return, either spouse) has a principal place of abode in the United States (determined as provided in section 32) for more than one-half of the taxable year or is a bona fide resident of Puerto Rico (within the meaning of section 937(a)) for such taxable year—

(A) subsection (d) shall not apply, and

so much of the credit determined under subsection (a) (after application of subparagraph (A)) as does not exceed the amount of such credit which would be so determined without regard to subsection (h)(4) shall be allowed under subpart C (and not allowed under this subpart).

(2) 17-year-olds eligible for treatment as qualifying childrenThis section shall be applied—

(A) by substituting “age 18” for “age 17” in subsection (c)(1), and

(B) by substituting “described in subsection (c) (determined after the application of subsection (i)(2)(A))” for “described in subsection (c)” in subsection (h)(4)(A).

(3) Credit amount

(4) Reduction of increased credit amount based on modified adjusted gross income

(A) In general

(B) Applicable threshold amountFor purposes of this paragraph, the term “applicable threshold amount” means—

(i) $150,000, in the case of a joint return or surviving spouse (as defined in section 2(a)) ,1

1 So in original.

(ii) $112,500, in the case of a head of household (as defined in section 2(b)), and

(iii) $75,000, in any other case.

(i) In generalThe amount of the reduction under subparagraph (A) shall not exceed the lesser of—(I) the applicable credit increase amount, or(II) 5 percent of the applicable phaseout threshold range.

(ii) Applicable credit increase amountFor purposes of this subparagraph, the term “applicable credit increase amount” means the excess (if any) of—(I) the amount of the credit allowable under this section for the taxable year determined without regard to this paragraph and subsection (b), over(II) the amount of such credit as so determined and without regard to paragraph (3).

(iii) Applicable phaseout threshold rangeFor purposes of this subparagraph, the term “applicable phaseout threshold range” means the excess of—(I) the threshold amount applicable to the taxpayer under subsection (b) (determined after the application of subsection (h)(3)), over(II) the applicable threshold amount applicable to the taxpayer under this paragraph.

(D) Coordination with limitation on overall credit

(j) Reconciliation of credit and advance credit

(1) In general

(2) Excess advance payments

(A) In general

(B) Safe harbor based on modified adjusted gross income

(i) In general

(ii) Phase out of safe harbor amount

(iii) Applicable income thresholdFor purposes of this subparagraph, the term “applicable income threshold” means—(I) $60,000 in the case of a joint return or surviving spouse (as defined in section 2(a)),(II) $50,000 in the case of a head of household, and(III) $40,000 in any other case.

(iv) Safe harbor amountFor purposes of this subparagraph, the term “safe harbor amount” means, with respect to any taxable year, the product of—(I) $2,000, multiplied by(II) the excess (if any) of the number of qualified children taken into account in determining the annual advance amount with respect to the taxpayer under section 7527A with respect to months beginning in such taxable year, over the number of qualified children taken into account in determining the credit allowed under this section for such taxable year.

(k) Application of credit in possessions

(1) Mirror code possessions

(A) In general

(B) Coordination with credit allowed against United States income taxes

(2) Puerto Rico

(A) Application to taxable years in 2021

(i) For application of refundable credit to residents of Puerto Rico, see subsection (i)(1).

(ii) For nonapplication of advance payment to residents of Puerto Rico, see section 7527A(e)(4)(A).

(B) Application to taxable years after 2021In the case of any bona fide resident of Puerto Rico (within the meaning of section 937(a)) for any taxable year beginning after December 31, 2021—

(i) the credit determined under this section shall be allowable to such resident, and

(ii) subsection (d)(1)(B)(ii) shall be applied without regard to the phrase “in the case of a taxpayer with 3 or more qualifying children”.

(3) American Samoa

(A) In general

(B) Distribution requirement

(i) In general

(ii) Application of section in event of absence of approved planIn the case of a taxable year with respect to which a plan is not approved under subparagraph (B)—(I) if such taxable year begins in 2021, subsection (i)(1) shall be applied by substituting “bona fide resident of Puerto Rico or American Samoa” for “bona fide resident of Puerto Rico”, and(II) if such taxable year begins after December 31, 2021, rules similar to the rules of paragraph (2)(B) shall apply with respect to bona fide residents of American Samoa (within the meaning of section 937(a)).

(4) Treatment of payments

(Added Pub. L. 105–34, title I, § 101(a), Aug. 5, 1997, 111 Stat. 796; amended Pub. L. 105–206, title VI, § 6003(a), July 22, 1998, 112 Stat. 790; Pub. L. 105–277, div. J, title II, § 2001(b), Oct. 21, 1998, 112 Stat. 2681–901; Pub. L. 106–170, title V, § 501(b)(1), Dec. 17, 1999, 113 Stat. 1919; Pub. L. 107–16, title II, §§ 201(a)–(b)(2)(C), (c)(1), (2), (d), 202(f)(2)(B), title VI, § 618(b)(2)(A), June 7, 2001, 115 Stat. 45–47, 49, 108; Pub. L. 107–90, title II, § 204(e)(1), Dec. 21, 2001, 115 Stat. 893; Pub. L. 107–147, title IV, §§ 411(b), 417(23)(A), Mar. 9, 2002, 116 Stat. 45, 57; Pub. L. 108–27, title I, § 101(a), May 28, 2003, 117 Stat. 753; Pub. L. 108–311, title I, §§ 101(a), 102(a), 104(a), title II, § 204, title IV, § 408(b)(4), Oct. 4, 2004, 118 Stat. 1167, 1168, 1176, 1192; Pub. L. 109–135, title IV, § 402(i)(3)(B), Dec. 21, 2005, 119 Stat. 2613; Pub. L. 110–172, § 11(c)(1), Dec. 29, 2007, 121 Stat. 2488; Pub. L. 110–343, div. B, title I, § 106(e)(2)(B), title II, § 205(d)(1)(A), div. C, title V, § 501(a), Oct. 3, 2008, 122 Stat. 3817, 3838, 3876; Pub. L. 110–351, title V, § 501(c)(1), Oct. 7, 2008, 122 Stat. 3979; Pub. L. 111–5, div. B, title I, §§ 1003(a), 1004(b)(1), 1142(b)(1)(A), 1144(b)(1)(A), Feb. 17, 2009, 123 Stat. 313, 314, 330, 332; Pub. L. 111–148, title X, § 10909(b)(2)(A), (c), Mar. 23, 2010, 124 Stat. 1023; Pub. L. 111–312, title I, §§ 101(b)(1), 103(b), Dec. 17, 2010, 124 Stat. 3298, 3299; Pub. L. 112–240, title I, §§ 103(b), 104(c)(2)(B), Jan. 2, 2013, 126 Stat. 2319, 2321; Pub. L. 113–295, div. A, title II, § 209(a), Dec. 19, 2014, 128 Stat. 4028; Pub. L. 114–27, title VIII, § 807(a), June 29, 2015, 129 Stat. 418; Pub. L. 114–113, div. Q, title I, § 101(a), (b), title II, §§ 205(a), (b), 208(a)(1), Dec. 18, 2015, 129 Stat. 3044, 3081, 3083; Pub. L. 115–97, title I, § 11022(a), Dec. 22, 2017, 131 Stat. 2073; Pub. L. 115–141, div. U, title I, § 101(i)(1), title IV, § 401(a)(3), Mar. 23, 2018, 132 Stat. 1162, 1184; Pub. L. 117–2, title IX, §§ 9611(a), (b)(2), 9612(a), Mar. 11, 2021, 135 Stat. 144, 148, 150.)