§24. Child tax credit

(a) Allowance of credit

There shall be allowed as a credit against the tax imposed by this chapter for the taxable year with respect to each qualifying child of the taxpayer an amount equal to $500 ($400 in the case of taxable years beginning in 1998).

(b) Limitation based on adjusted gross income

(1) In general

The amount of the credit allowable under subsection (a) shall be reduced (but not below zero) by $50 for each $1,000 (or fraction thereof) by which the taxpayer's modified adjusted gross income exceeds the threshold amount. For purposes of the preceding sentence, the term "modified adjusted gross income" means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.

(2) Threshold amount

For 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

(C) $55,000 in the case of a married individual filing a separate return.

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

(c) Qualifying child

For purposes of this section-

(1) In general

The term "qualifying child" means any individual if-

(A) the taxpayer is allowed a deduction under section 151 with respect to such individual for the taxable year,

(B) such individual has not attained the age of 17 as of the close of the calendar year in which the taxable year of the taxpayer begins, and

(C) such individual bears a relationship to the taxpayer described in section 32(c)(3)(B).

(2) Exception for certain noncitizens

The term "qualifying child" shall not include any individual who would not be a dependent if the first sentence of section 152(b)(3) were applied without regard to all that follows "resident of the United States".

(d) Additional credit for families with 3 or more children

(1) In general

In the case of a taxpayer with three or more qualifying children for any taxable year, the aggregate credits allowed 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 (without regard to this subsection) would increase if the limitation imposed by section 26(a) were increased by the excess (if any) of-

(i) the taxpayer's Social Security taxes for the taxable year, over

(ii) the credit allowed under section 32 (determined without regard to subsection (n)) 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).

(2) Reduction of credit to taxpayer subject to alternative minimum tax

For taxable years beginning after December 31, 2001, the credit determined under this subsection for the taxable year shall be reduced by the excess (if any) of-

(A) the amount of tax imposed by section 55 (relating to alternative minimum tax) with respect to such taxpayer for such taxable year, over

(B) the amount of the reduction under section 32(h) with respect to such taxpayer for such taxable year.

(3) Social security taxes

For purposes of paragraph (1)-

(A) In general

The 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)(1) 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

The term "social security taxes" shall not include any taxes to the extent the taxpayer is entitled to a special refund of such taxes under section 6413(c).

(C) Special rule

Any amounts paid pursuant to an agreement under section 3121(l) (relating to agreements entered into by American employers with respect to foreign affiliates) which are equivalent to the taxes referred to in subparagraph (A)(i) shall be treated as taxes referred to in such subparagraph.

(e) Identification requirement

No credit shall be allowed under this section to a taxpayer with respect to any qualifying child unless the taxpayer includes the name and taxpayer identification number of such qualifying child on the return of tax for the taxable year.

(f) Taxable year must be full taxable year

Except in the case of a taxable year closed by reason of the death of the taxpayer, no credit shall be allowable under this section in the case of a taxable year covering a period of less than 12 months.

(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 .)

Prior Provisions

A prior section 24, added Pub. L. 92–178, title VII, §701(a), Dec. 10, 1971, 85 Stat. 560 , §41; amended Pub. L. 93–625, §§11(a)–(c), (e), 12(a), Jan. 3, 1975, 88 Stat. 2119 , 2120; Pub. L. 94–455, title V, §503(b)(4), title XIX, §§1901(b)(1)(B), (H)(ii), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1562 , 1790, 1791, 1834; Pub. L. 95–600, title I, §113(c), Nov. 6, 1978, 92 Stat. 2778 ; Pub. L. 97–473, title II, §202(b)(1), Jan. 14, 1983, 96 Stat. 2609 ; Pub. L. 98–21, title I, §122(c)(1), Apr. 20, 1983, 97 Stat. 87 ; renumbered §24 and amended Pub. L. 98–369, div. A, title IV, §§471(c), 474(f), July 18, 1984, 98 Stat. 826 , 831, related to contributions to candidates for public office, prior to repeal by Pub. L. 99–514, title I, §§112(a), 151(a), Oct. 22, 1986, 100 Stat. 2108 , 2121, applicable to taxable years beginning after Dec. 31, 1986.

Amendments

1999-Subsec. (d)(2). Pub. L. 106–170 substituted "2001" for "1998" in introductory provisions.

1998-Subsec. (d)(1). Pub. L. 105–206, §6003(a)(1)(C), added par. (1) and struck out heading and text of former par. (1). Text read as follows: "In the case of a taxpayer with 3 or more qualifying children for any taxable year, the amount of the credit allowed under this section shall be equal to the greater of-

"(A) the amount of the credit allowed under this section (without regard to this subsection and after application of the limitation under section 26), or

"(B) the alternative credit amount determined under paragraph (2)."

Subsec. (d)(2). Pub. L. 105–277 substituted "For taxable years beginning after December 31, 1998, the credit" for "The credit".

Pub. L. 105–206, §6003(a)(1)(C), added par. (2) and struck out heading and text of former par. (2). Text read as follows: "For purposes of this subsection, the alternative credit amount is the amount of the credit which would be allowed under this section if the limitation under paragraph (3) were applied in lieu of the limitation under section 26."

Subsec. (d)(3). Pub. L. 105–206, §6003(a)(1)(A), (B), (2), redesignated par. (5) as (3), substituted "paragraph (1)" for "paragraph (3)" in introductory provisions, and struck out heading and text of former par. (3). Text read as follows: "The limitation under this paragraph for any taxable year is the limitation under section 26 (without regard to this subsection)-

"(A) increased by the taxpayer's social security taxes for such taxable year, and

"(B) reduced by the sum of-

"(i) the credits allowed under this part other than under subpart C or this section, and

"(ii) the credit allowed under section 32 without regard to subsection (m) thereof."

Subsec. (d)(4). Pub. L. 105–206, §6003(a)(1)(A), struck out heading and text of par. (4). Text read as follows: "If the amount of the credit under paragraph (1)(B) exceeds the amount of the credit under paragraph (1)(A), such excess shall be treated as a credit to which subpart C applies. The rule of section 32(h) shall apply to such excess."

Subsec. (d)(5). Pub. L. 105–206, §6003(a)(1)(B), redesignated par. (5) as (3).

Effective Date of 1999 Amendment

Pub. L. 106–170, title V, §501(c), Dec. 17, 1999, 113 Stat. 1919 , provided that: "The amendments made by this section [amending this section and sections 26 and 904 of this title] shall apply to taxable years beginning after December 31, 1998."

Effective Date of 1998 Amendments

Pub. L. 105–277, div. J, title II, §2001(c), Oct. 21, 1998, 112 Stat. 2681–901 , provided that: "The amendments made by this section [amending this section and section 26 of this title] shall apply to taxable years beginning after December 31, 1997."

Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

Effective Date

Section 101(e) of Pub. L. 105–34 provided that: "The amendments made by this section [enacting this section and amending sections 32, 501, and 6213 of this title and section 1324 of Title 31, Money and Finance] shall apply to taxable years beginning after December 31, 1997."

Section Referred to in Other Sections

This section is referred to in sections 32, 501, 6213 of this title.