• Publication 972 was the IRS guidance booklet that explained how to determine and claim the Child Tax Credit (CTC) and the Credit for Other Dependents for tax years through 2020.
– For tax years 2021 and later, Publication 972 is no longer the primary tool for figuring the credit; you use Schedule 8812 with Form 1040 instead.
– For 2020 (and since the 2018 reform), the maximum CTC was $2,000 per qualifying child, with a refundable portion (the Additional Child Tax Credit, ACTC) up to $1,400 per child subject to earned‑income rules and limits.
– The CTC phases out at higher incomes: for 2020 the phaseout began at $200,000 of adjusted gross income (AGI) for single filers and $400,000 for married filing jointly.
What Publication 972 Was
– Publication 972, “Child Tax Credit and Credit for Other Dependents,” was an IRS taxpayer publication that summarized:
• who qualified as a “qualifying child”,
• the dollar limits and phaseout rules that applied in that tax year,
• worksheets and examples to calculate amount(s) of credit and refundable portion (ACTC),
• filing and documentation guidance.
– It applied to tax years through 2020. For 2021 and later, the IRS moved CTC computation and refund worksheets to Schedule 8812 and updated online instructions and guidance reflecting law changes.
Understanding the Child Tax Credit (as described in Publication 972 for 2020 and earlier)
– Purpose: to reduce tax liability for taxpayers with qualifying dependent children and, for some low‑income filers, to provide a refundable amount if the credit exceeds tax owed.
– Two components (pre‑2021 formulation):
• Nonrefundable CTC: up to $2,000 per qualifying child to reduce tax liability.
• Refundable portion (ACTC): a portion of unused CTC refundable, limited (for 2020) to a maximum of $1,400 per qualifying child, subject to an earned‑income threshold and formula found on Schedule 8812.
Eligibility — who is a qualifying child (summary)
A child generally qualified for the CTC if they met all of these tests (as described in Publication 972 for the years it covered):
– Relationship: your son, daughter, stepchild, eligible foster child, brother, sister, half sibling, stepsibling, or a descendant of any of them (for example, a grandchild or niece/nephew).
– Age: under age 17 at the end of the tax year (i.e., age 16 or younger on December 31).
– Residency: lived with you for more than half the tax year (with limited exceptions).
– Support: the child did not provide more than half of their own support.
– Joint return: the child is not filing a joint return for the year (unless that joint return is only to claim a refund of withheld tax).
– Citizenship/residency: typically the child must be a U.S. citizen, U.S. national, or U.S. resident alien and generally must have a valid Social Security number (SSN) issued before the due date of the return to be eligible for the full CTC (check current IRS rules for exceptions/changes).
Credit amount and phaseouts (as in Publication 972 for 2020)
– Maximum: $2,000 per qualifying child (this was set by the tax law changes effective in 2018 and still in effect for 2020).
– Refundable portion (ACTC) for 2020: up to $1,400 per qualifying child (subject to the earned‑income calculation and limits).
– Phaseouts (2020): the nonrefundable CTC was reduced (phased out) for taxpayers with AGI over $200,000 ($400,000 married filing jointly).
Refunds — Additional Child Tax Credit (ACTC)
– If your CTC exceeded your tax liability, you could be eligible to receive the refundable portion (ACTC) up to the annual limit (for 2020 up to $1,400 per child).
– The ACTC refund amount depended on earned income above a small threshold (commonly $2,500 for those years) and a formula shown on Schedule 8812.
– Claiming the ACTC: filers had to complete Schedule 8812 and attach it to Form 1040 to request any refundable portion.
Practical steps — how Publication 972 guided taxpayers (and how to proceed now)
If you are working with a pre‑2021 return (or reviewing what Publication 972 contained):
1. Confirm qualifying child status:
• Check relationship, age (under 17), residency, support, joint return, and SSN/citizenship requirements.
2. Compute tentative credit:
• Multiply number of qualifying children by the per‑child maximum (e.g., $2,000 in 2020).
3. Apply nonrefundable limits:
• Subtract your tax liability; the CTC reduces tax owed up to zero but cannot produce a refund itself.
4. Compute refundable portion (ACTC) if CTC > tax liability:
• Use the worksheet in Publication 972 or Schedule 8812 (the ACTC formulas were placed on Schedule 8812).
• The refundable amount depends on earned income over the threshold (e.g., $2,500) and is subject to the ACTC maximum per child.
5. Report on your return:
• Enter credit amounts on the applicable lines of Form 1040 and attach Schedule 8812 if claiming ACTC.
6. Keep records:
• Retain documentation proving eligibility (SSNs, birth/adoption records, custody documentation, school records showing residency, etc.) in case of IRS questions or audits.
If you are filing for 2021 or later:
– Do not rely on Publication 972 as the sole source; instead:
• Use Form 1040 and Schedule 8812 to compute the nonrefundable and refundable portions of the child tax credit (Schedule 8812 contains the calculation worksheet and ACTC instructions).
• Be aware that the CTC rules changed for 2021 under the American Rescue Plan (expanded payments, different age thresholds, partial advance payments for 2021, etc.). Always check current IRS guidance for the tax year you are filing.
Worked example (simple, illustrating how the parts fit)
– Taxpayer with two qualifying children (2020 rules), AGI below phaseout levels:
• Tentative CTC = 2 × $2,000 = $4,000.
• If tax liability = $1,500, the nonrefundable CTC reduces tax to $0 (use $1,500 of the $4,000).
• Remaining unused credit = $2,500. The taxpayer may be eligible for a refundable ACTC amount up to $1,400 per child (subject to the earned‑income calculation), so maximum refundable ACTC could be up to $2,800 in total if the earned‑income formula and limits permit. The actual refundable amount is computed on Schedule 8812.
Special considerations and common pitfalls
– Social Security numbers: children generally needed valid SSNs by the return due date to be eligible for the CTC (rules changed over time; check current IRS guidance).
– Custody and divorced parents: special tiebreaker and custodial rules determine who can claim the child. The custodial parent (who the child lives with more than half the year) generally claims the credit unless a signed release is in place.
– Foster and adopted children: eligible in many cases; adoption documentation or foster placement records may be needed.
– High‑income taxpayers: the credit phases out starting at specified AGI thresholds ($200k/$400k for 2020).
– Nonqualifying dependents: some dependents (e.g., older children or relatives) may be eligible only for the separate “Credit for Other Dependents” (nonrefundable) rather than the CTC.
Where to find current guidance and worksheets
– Publication 972 (historical/archived editions) — useful for tax years through 2020:
– Instructions for Schedule 8812 (current year) — contains worksheets and the ACTC computation:
– IRS pages summarizing changes to family tax credits and what’s new for each tax year (search “Child Tax Credit” on irs.gov).
Sources
– Investopedia, “What Was Publication 972: Child Tax Credit?” (source URL you provided)
– Internal Revenue Service (various pages):
• Publication 972 (archived/2020):
• About Publication 972:
• Publication 972 (2022 edition and later changes):
• Schedule 8812 instructions:
• IRS guidance on Child Tax Credit and tax law changes (search “Child Tax Credit” on irs.gov)
– Walk you through a personalized calculation for your family (need filing status, number of qualifying children, AGI, earned income, and tax liability).
– Provide links to the specific worksheets used on Schedule 8812 for the ACTC calculation for a given tax year.