Child Tax Credit
What is child tax credit?
The Child Tax Credit is an important tax credit that may be worth as much as $1,000 per qualifying child depending upon your income.You may be able to claim a child tax credit of up to $1,000 for each of your qualifying children.
Where to claim the child tax credit?
The child tax credit is claimed on the tax form 1040 line 52 (Child Tax Credit).
How much child tax credit will I get?
Child tax credit is a nonrefundable tax credit which means that you cannot get a tax refund for the amount of tax credit that exceeds your tax liability. You may qualify for the entire child tax credit of $1,000 but you can only use the amount of that credit that reduces your income tax to zero. However, you may be able to claim the additional child tax credit on line 68 (Additional Child Tax Credit) of the tax form 1040. In another word, with the Child Tax Credit, you may be able to reduce your federal income tax by up to $1,000 for each qualifying child under the age of 17.
Am I eligible to claim Child Tax Credit?
A qualifying child for this credit is someone who meets the qualifying criteria of six tests: age, relationship, support, dependent, citizenship, and residence. We will discuss eligibility further on our website.
Age Test - To qualify, a child must have been under age 17 - age 16 or younger - at the end of the year.
Relationship Test - To claim a child for purposes of the Child Tax Credit, they must either be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew. An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.
Support Test - In order to claim a child for this credit, the child must not have provided more than half of their own support.
Dependent Test - You must claim the child as a dependent on your federal tax return.
Citizenship Test - To meet the citizenship test, the child must be a U.S. citizen, U.S. na
Residence Test - The child must have lived with you for more than half of 2010. There are some exceptions to the residence test, which can be found in IRS Publication 972, Child Tax Credit.
What are the Limitations?
The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status. For married taxpayers filing a joint return, the phase-out begins at $110,000. For married taxpayers filing a separate return, it begins at $55,000. For all other taxpayers, the phase-out begins at $75,000. In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.
Additional Child Tax Credit
If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit.