Child's Tax Credit Relief
- The child tax credit acts as a refund on your federal income taxes. This means that the taxes you owe, if any, will be reduced dollar for dollar and you may get any excess of the credit refunded to you. You may claim a tax credit of up to $1,000 for each of your qualifying children. You may take this credit in addition to the child and dependent care tax credit and earned income tax credit, if you are eligible for either of those credits.
- Only qualifying children afford parents eligibility for the child tax credit. A six-part test is used to determine whether a child is a qualifying child. Those tests are age, relationship, support, dependent, citizenship, and residence. A qualifying child must be under the age of 17 at the end of the taxable year and must be your dependent (for example, your son or daughter, stepchild or foster child, brother, sister, step-sibling, or a descendant of any of them). The qualifying child cannot provide more than half of his own support for the taxable year. You must claim this qualifying dependent as a dependent on your taxes. Lastly, the qualifying child must be a United States citizen and live with you for more than half of the taxable year for which you are claiming him as a dependent.
- There are income limits imposed on the child tax credit as it is designed to help low to average income taxpayers. Your filing status, such as single, married or head of household, affects the amount of your modified adjusted gross income (MAGI) where the credit will begin to be phased out. If you are married and filing a joint return, the child tax credit will be phased out if your MAGI is $110,000 or more. If you are married and filing your taxes separately, phase-out will begin at a MAGI of $55,000. For single or head of household taxpayers, the phase-out starts when your MAGI reaches $75,000.
- Unless you qualify for the additional child tax credit, you will not need to file any additional forms with your taxes. If you use Form 1040 or Form 1040-A when filing your taxes, you simply check the box on Line 6c, Column (4) for each of your qualifying children to claim the child tax credit.
- If you do not qualify for the full amount of the child tax credit, you may be eligible for the additional child tax credit. To claim this credit, you must figure out your child tax credit amount. Then, if you answered "yes" to the questions on Line 9 or 10 of the Child Tax Credit Worksheet in your Form 1040 or 1040-A, you must use Form 8812 to determine whether you are eligible for the additional child tax credit. If you are eligible once you have filled out Form 8812, then you carry the figure from Line 13 of Form 8812 to Line 65 of Form 1040 or Line 42 of Form 1040-A to claim the additional child tax credit.
