My cousin passed away and I’m raising her 2 daughters one is special needs but it’s says I can’t claim them for child tax credit is this correct?

[JohnB5677]

You haven't given sufficient details to make a determination, but these are the rules.

You qualify for the full amount of the 2022 Child Tax Credit for each qualifying child if you meet all eligibility factors and your annual income is not more than $200,000 ($400,000 if filing a joint return).

 The guidelines are:

• Be under age 17 at the end of the year.
• Be your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these (for example, a grandchild, niece or nephew)
• You provide more than half of their own financial support during the year.
• Have lived with you for more than half the year.
• Be properly claimed as your dependent on your tax return.

You will get a non-refundable credit up to $2000 per child.  That means the credit cannot be more than your actual tax bill. However, if your child tax credit was limited by your tax bill you may be able to get the remainder up to $1500 as a refundable Additional Child Tax Credit.  

  IRS Child Tax Credit

What is the Child Tax Credit

[Hal_Al]

I can’t claim them for child tax credit is this correct?

Yes, a cousin, even a first cousin, is not closely enough related to be a "qualifying child" dependent.  You may only claim the $500 Other Dependent Credit.

There are two types of dependents, "Qualifying Children"(QC) and Other ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test. Only a QC qualifies a taxpayer for the Earned Income Credit and the Child Tax Credit. They are interrelated but the rules are different for each.

The support test is different for each type. The support test, for a QC, is only that the child didn't provide more than half his own support. The support test for a Qualifying Relative is that the taxpayer provided more than half the relative's support.

If they were legally placed, in your home, by a court or government agency, they are your "foster children".  As such, you enter they as "my child", in TT, rather than "someone else I support".