The Child Tax Credit, EITC & Dependents: A Complete Guide for Married Couples

The Child Tax Credit (CTC): Up to $2,200 Per Child

The Child Tax Credit is one of the largest tax breaks available to families with children. For 2025, the credit is worth up to $2,200 per qualifying child under age 17.

Who Is a "Qualifying Child"?

A child must meet all of the following tests:

• Age: Under age 17 at the end of the tax year.
• Relationship: Your child, stepchild, foster child, sibling, half-sibling, or a descendant of any of these.
• Residency: Lived with you for more than half the year.
• Dependency: Listed as a dependent on your return.
• Support: Did not provide more than half of their own support during the year.
• Citizenship: Must be a U.S. citizen, U.S. national, or U.S. resident alien.

Income Phase-Out

The CTC begins to phase out when modified AGI exceeds $400,000 for MFJ (or $200,000 for single/MFS filers). The credit reduces by $50 for each $1,000 of income above the threshold.

The Additional Child Tax Credit (ACTC) — The Refundable Portion

If the CTC exceeds your tax liability, up to $1,700 per child of the unused credit can be refunded to you as the Additional Child Tax Credit — even if you owe $0 in taxes. This makes it one of the most powerful credits for lower and middle-income families.

To calculate the ACTC: it equals 15% of your earned income above $2,500, up to the $1,700 per-child limit.

The Earned Income Tax Credit (EITC): Up to $7,830

The EITC is the largest refundable tax credit for working families. It's designed to supplement wages for lower and moderate-income workers, and it can produce a significant refund even when little or no tax was withheld.

2025 EITC Maximum Credit Amounts

Critical EITC Rules for Married Couples

• MFS filers cannot claim the EITC — this is one of the biggest financial penalties of filing separately.
• Both earned income (wages, self-employment) and AGI must fall below the thresholds — you're tested on both.
• Investment income must be $11,600 or less for 2025.
• Both spouses must have valid Social Security numbers.
• You cannot claim the EITC for a child who is claimed on another person's return.

Important: Our MFJ vs. MFS Tax Comparator automatically calculates your EITC eligibility and amount using the official 2025 IRS tables — so you always see the full picture when comparing filing statuses.

Older Children & Other Qualifying Dependents

Children who are 17 or older (and other relatives) no longer qualify for the Child Tax Credit, but they may still qualify as dependents — unlocking the Credit for Other Dependents (ODC) worth up to $500 per person. The same income phase-out thresholds apply as the CTC.

Who Is a "Qualifying Relative" Dependent?

• Must not be a qualifying child of you or anyone else.
• Must be a member of your household all year or related to you (parent, sibling, adult child, grandchild, etc.).
• Must have gross income below $5,050 for 2025 (exceptions apply for permanently disabled individuals).
• Must receive more than half of their support from you.

Dependent Care FSA + Child & Dependent Care Credit

If you pay for daycare, after-school programs, or similar care for a child under 13 (or a disabled dependent of any age) so both spouses can work, you may benefit from:

• Dependent Care FSA: Contribute up to $5,000 pre-tax through your employer. Reduces both federal income tax and payroll tax.
• Child & Dependent Care Credit: Claim 20–35% of qualifying expenses up to $3,000 (one dependent) or $6,000 (two or more). Expenses used for the FSA must be subtracted from the credit base.

Divorce & Separated Parents: Who Claims the Children?

When parents are divorced or separated, only one parent may claim each child as a dependent in a given tax year. The general rule:

• The custodial parent (the parent the child lived with for more nights during the year) has the default right to claim the child.
• The custodial parent may release the claim to the noncustodial parent by signing IRS Form 8332.
• Whichever parent claims the child generally claims the CTC, ACTC, and ODC. However, only the custodial parent can claim the EITC and Dependent Care Credit regardless of who claims the dependency exemption.