Chapter Listing

Tax Credit Programs

Child Tax Credits

Summary

CHILD TAX CREDIT

The Child Tax Credit (CTC) is federal tax credit worth up to $2,000 for each dependent child under 17 and offsets the household’s tax liability for the year. Any remaining amount after the household’s tax liability has been offset may be available as a refund through the Additional Child Tax Credit (ACTC).

The Credit for Other Dependents (COD)

The COD is a federal tax credit signed into law as part of the 2017 Tax Cuts and Jobs Act and is in effect for tax years 2018 through 2025. The credit provides a credit for certain dependents that don’t qualify for the Child Tax Credit, such as qualifying children age 17 or older, adult dependents, and dependents who have an ITIN.

New York’s Empire State Child Credit

NYS Empire Child Credit is a refundable credit for full-year New York State residents with children who qualify for the Federal Child Tax Credit who are at least four years of age but under 17.

CHILD AND DEPENDENT CARE TAX CREDIT

The Federal Child and Dependent Care Tax Credit (CDCC) is a non-refundable credit for working people who pay for child or dependent care and is limited to the amount of the worker’s income tax liability.

New York State also provides a Child and Dependent Care Credit. The NYS credit is a percentage of the federal credit. The precise percentage will depend on the claimant’s income. Unlike the federal benefit, however, the state credit can be issued as a refund.

The New York City Child and Dependent Care Credit is for families who pay child care expenses for children under the age of four. The credit is a percentage of the New York State credit. The city credit can be used against taxpayer New York City tax liability; any amount left after the tax has been credited will be refunded to the claimant.

Child Tax Credit (CTC)

DESCRIPTION OF THE CHILD TAX CREDIT

Child Tax Credit and Additional Child Tax Credit (ACTC)

The federal Child Tax Credit (CTC) is worth up to $2,000 for each qualifying dependent child under 17 claimed on the family’s tax return and is used to offset any federal income tax owed (tax liability) for the year. A family’s income level determines the exact amount. Earnings be at least $2,500 to qualify for the CTC. The credit phases out for income above $200,000 for single filers and $400,000 for joint filers.

If the credit exceeds the taxes owed, families may receive a refund of up to $1,400 per child known as the additional child tax credit (ACTC) or refundable CTC. The ACTC is limited to 15% of earnings above $2,500.

Credit for Other Dependents (COD)

Certain dependents who are not eligible for the CTC can receive a nonrefundable credit of up to $500 for each qualifying dependent.

Empire State Child Credit

The Empire State child credit is a refundable credit available to full-year New York State residents who have at least one qualifying child who is at least 4 years old and under 17, who meet income limitations.

For taxpayers who claim the federal child tax credit, the Empire State child credit is $100 for each child or 33% of the federal credit, whichever is greater. Taxpayers who don’t claim the federal credit can claim $100 for each child.

QUALIFYING FOR THE CHILD TAX CREDIT

Child Definition

  • Child Tax Credit and Additional Child Tax Credit

    A qualifying child for the purposes of determining eligibility for the federal CTC and ACTC, must have a valid Social Security number, as well as include:
    • The individual’s natural children, grandchildren, stepchildren, and adopted children; relatives including brothers, sisters, stepbrothers, stepsisters, as well as descendants of such relatives; and foster children who are placed with the worker by an authorized private or governmental placement agency.
    • A child under age 17 (at the end of the tax year),
    • A child who has not provided more than half of their own support at the end of the tax year,
    • A child who has lived with the taxpayer for more than half of the tax year (there are exceptions go to https://www.irs.gov/publications/p972#en_US_2018_publink100012083),
    • A child who is claimed as a dependent on the filer’s federal tax return,
    • A child who has not filed a joint return for the year (or files it only to claim a refund of withheld income tax or estimated tax paid).
  • Credit for Other Dependents (COD)

    For the Credit for Other Dependents, a qualifying child include dependents under the age of 19 or under 24 years old if a full-time student. There is no age limit for permanently and totally disabled children. In addition, the dependent must
    • Be ineligible for the CTC;
    • Not file a joint return with their spouse;
    • Live with the taxpayer for more than half the year (exceptions apply); and
    • Have not provided more than half of their own support for the year.
  • Empire State Child Credit

    A qualifying child for purposes of the New York State Empire State child credit include all of those mentioned above under the Child Tax Credit. However, for the Empire State credit a child must be at least 4 years of age but under the age of 17.

Citizenship/Immigration Requirements

  • Child Tax Credit and Additional Child Tax Credit
    The taxpayer may have an ITIN but to claim the federal child tax credit and the ACTC, all qualifying children must be U.S. citizens or U.S. resident immigrants and therefore must provide a valid Social Security number.
  • Credit for Other Dependents
    All qualifying children must be a U.S. citizen or have an ITIN.
  • Empire State Child Credit
    All qualifying children must be a U.S. citizen or have an ITIN.

Residency

The taxpayer must be a New York State resident, and the child must have lived with the taxpayer for more than half of the filing year. The residency test will be met even if the applicant or the qualifying child is away from home on a temporary absence due to a special circumstance, including illness, attending school, business, vacation, or military service.

Assets/Resources

There are no assets/resource requirements.

Income

  • Child Tax Credit and the Credit for Other Dependents

    Households with adjusted gross income lower than the following amounts are entitled to the maximum tax credit of $2,000 for each qualifying child. Households with incomes higher the amounts listed below will receive a reduced credit amount.
    • Married parents filing jointly with incomes between $400,000 – $440,000;
    • Other Than Married Parents: incomes between $200,000-$240,000
  • Additional Child Tax Credit

    Households must have earnings of at least $2,500 to qualify for the Additional Child Tax Credit refund.
  • Empire State Child Credit – income guidelines are as follows:
    • Married parents filing jointly: 100,000 or less;
    • Single, or head of household, or qualifying widow(er): $75,000 or less
    • Married filing separately: $55,000 or less

CLAIMING THE CHILD TAX CREDIT

Child Tax Credit, Additional Child Tax Credit, and Credit for Other Dependents

To claim these credits taxpayers must file 1040 form, https://www.irs.gov/pub/irs-pdf/f1040.pdf. Instructions can be found at https://www.irs.gov/pub/irs-pdf/i1040gi.pdf.

Empire State Child Credit

To claim the Empire State credit the tax filer must file form IT-213 along with the New York State income tax return. Find the form at https://www.tax.ny.gov/pit/ads/efile_addit213-2d.htm and instructions available at https://www.tax.ny.gov/pdf/current_forms/it/it213i.pdf.

See below, Additional Resources, for free tax preparation information.

Child & Dependent Care Tax Credit (CDCC)

DESCRIPTION OF THE CHILD & DEPENDENT CARE TAX CREDIT

Federal Child and Dependent Care Tax Credit

The federal tax credit is a non-refundable tax credit based on a percentage of the taxpayer’s adjusted gross income that is used for dependent care while s/he is working or seeking employment. The taxpayer may use up to $3,000 of the expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals.

Those with adjusted gross incomes of $15,000 or less obtain a 35% credit on their work-related childcare expenses. This percentage gradually decreases to 20% for those with incomes of $43,000 or more.

Go to https://www.tax.ny.gov/pdf/current_forms/it/it216i.pdf, which contains a detailed chart of the exact credit amounts for each income level on page 5.

A family’s adjusted gross income is $35,000 per year. In the current year they have a tax liability of $200. Their child and dependent care work-related expenses are $2,000. Based on their income their tax credit would be 24% of $2,000, thus their potential credit would be $480. However, since their tax liability is only $200, the credit would reduce the liability to $0, and they would not be entitled to a refund for the difference.

Visit https://www.irs.gov/help/ita/am-i-eligible-to-claim-the-child-and-dependent-care-credit to help determine eligibility to claim the Child Care and Dependent care credit.

New York State Child and Dependent Care Tax Credit

The NYS credit is a minimum of 20% and a maximum of 110% of the federal credit, depending on the amount of the claimant’s adjustable gross income. An individual who qualifies for the federal credit can claim the State credit, even if s/he does not claim the federal credit.

Unlike the federal benefit, however, the state credit is refundable and is provided on a sliding scale based on the family’s income.

New York City Child Care Tax Credit

The NYC credit can be as much as 75% of the New York State child and dependent care credit, depending on the amount of the taxpayer’s federal adjusted gross income.
The city credit can be used against taxpayer New York City tax liability; any amount left after the tax has been credited will be refunded to the claimant. The amount provided is based on a sliding scale according to the family’s income.

QUALIFYING FOR THE CHILD & DEPENDENT CARE TAX CREDIT

Qualifying Filer

  • Federal and NYS Child and Dependent Care Tax Credit

    To qualify an individual (or married couple) must have earned income in the tax filing year, must file as single, head of household, qualifying widow(er), or married filing jointly. The filer must have reported expenses for the care of a qualifying dependent who has been living with the filer for more than 6 months.

    For the purpose of the CDCC, qualifying dependents include:
    • Children under age 13, or
    • A spouse who is physically or mentally unable to care for him or herself, or
    • A dependent who is physically or mentally unable to care for him or herself and for whom the taxpayer can claim an exemption.
  • NYC Child and Dependent Care Tax Credit

    To qualify for the NYC Child and Dependent Care Tax Credit, the individual must be eligible to claim the New York State child and dependent care credit and meet the same criteria listed above however, the family must have paid child care expenses for at least one child who was under the age of four on December 31st of the current tax year.

Qualifying Expenses

Claimants must have child and/or dependent care expenses that are work-related to qualify for the credit. Expenses are considered work-related if:

  • Such expenses allow the claimant (and spouse, if married) to work or look for work, and
  • The expenses are for a qualifying person’s care (ie. day care, family day care, church care, neighbor or any type of care qualifies)

Expenses for care do not include amount paid for food, clothing, education, or entertainment. However, small amounts paid for these items can be included, if they cannot be separated from the cost of caring for the qualifying person, for example, fixed day care fees typically include meals.

  • Federal Child and Dependent Care Tax Credit

    The total expenses that may be used to calculate the credit may not be more than $3,000 (for one qualifying individual) or $6,000 (for two or more qualifying individuals).
  • NYS/NYC Child and Dependent Care Tax Credit

    For NYS/NYC, the qualified expense limit for taxpayers with more than two qualifying persons, is as follows:
    • $7,500 for three qualifying persons;
    • $8,500 for four qualifying persons;
    • $9,000 for five or more qualifying persons.

Qualifying Provider

The childcare provider him/herself cannot be claimed as a dependent by the taxpayer or spouse. A relative, except for a spouse, may provide the care if s/he is not a dependent of the taxpayer. If the childcare provider is the taxpayer’s child, s/he cannot be a dependent and must be age 19 or older by the end of the calendar year.

Citizenship/Immigration Requirements

Workers must be U.S. citizens or lawfully residing immigrants who can lawfully work in the U.S.

Residency

  • Federal Child and Dependent Care Credit: Claimants may reside in any state to access the federal credit.
  • NYS Child and Dependent Care Credit: Claimants must reside and file in New York State. Those filing for the credit must maintain a residence with the qualifying person(s).
  • NYC Child and Dependent Care Credit: Claimants must be a full or a part year resident taxpayer of New York City.

Assets/Resources

There are no assets/resource requirements.

Income

  • The federal and NYS Child and Dependent Care Credit is available to families of all income levels, although there must be earned income in the household.
  • For the NYC child and dependent care credit, families must have a federal adjusted gross income below $30,000.

CLAIMING THE CHILD & DEPENDENT CARE TAX CREDIT

Federal Child and Dependent Care Tax Credit

Claim the credit by completing the 1040 form, https://www.irs.gov/pub/irs-pdf/f1040.pdf. Instructions can be found at https://www.irs.gov/pub/irs-pdf/i1040gi.pdf.

New York State/New York City Child and Dependent Care Tax Credit

For the NYS/NYC credit, claimants must file a NYS return and complete Form IT-216,
https://www.tax.ny.gov/pdf/current_forms/it/it216_fill_in.pdf including the information regarding payment to the care provider. Instructions can be found at https://www.tax.ny.gov/pdf/current_forms/it/it216i.pdf.

Claimants must identify the care provider on the tax return and provide a Social Security number if an individual, or an employer identification number if a professional day care center.

If the claimant has tried to obtain the provider’s identification number but has not been successful, s/he can explain on the form that s/he requested the information from the provider, but the provider did not comply with the request.

See below, Additional Resources, for free tax preparation information.

Coordination of Child Tax Credits

EARNED INCOME TAX CREDIT & CHILD AND DEPENDENT CARE CREDIT

The Child Tax Credit does not affect the taxpayer’s eligibility for the Earned Income Tax Credit (EITC) or the Child and Dependent Care Credit. However, because the federal Child and Dependent Care Tax Credit is counted before figuring the Child Tax Credit, it may eliminate any income tax liability, thus eliminating any refund under the Additional CTC.

CHILD AND DEPENDENT CARE & CREDIT FOR OTHER DEPENDENTS

The Credit for Other Dependents can be claimed with the child and dependent care credit.

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