Child Tax Credit Refunds

Tammy Logston
by Tammy Logston, Contributor

In order to potentially claim a refund of the Child Tax Credit, it is recommended that any and all other tax deductions or tax credits be applied, prior to claiming the Child Tax Credit.  Once you’ve completed all tax forms necessary to claim any deductions, including dependents, and you’ve identified and listed all qualifying credits, prior to the Child Tax Credit, then you are ready to determine if you qualify for a Child Tax Credit Refund.

Keep in mind that the most commonly overlooked deductions and credits include the Earned Income Tax Credit, medical expense tax credits (including mileage to/from doctors appointments and medical exams) the Saver’s Tax Credit, moving expenses tax credit, the Hope Scholarship Credit Tax Credit, etc.  Remember that you have up to 3 years from the date that federal income tax return was due to claim any missed deductions or credits in preceding years.

Now that you are ready to determine if you qualify for a tax refund of the Child Tax Credit, refer to the IRS Tax Form Additional Child Tax Credit as well as the worksheet from IRS Publication 972 for Child Tax Credits.  Should you be claiming any of the following as credits, you will need to have the appropriate form completed in advance:

•    Residential Energy Credits (Tax Form 5695)
•    Qualifying Electric Vehicle Credit (Tax Form 8834)
•    Qualifying Alternative Motor Credit (Tax Form 8910)
•    Qualifying Electric Drive Motor Credit (Tax Form 8936)
•    Qualifying Elderly or Disabled Credit (Schedule R)

Upon completing the worksheet for Child Tax Credit found in IRS Publication 972, if the amount of Child Tax Credit exceeds the amount of your income tax liability, you may qualify for a tax refund.  Line 10 from the worksheet is your Child Tax Credit.  You will need this figure to complete the next step in determining if you can claim a tax refund.

You will also need to ascertain if you qualify for Earned Income Credit.  For tax year 2010, the following table details eligibility:

No. of Children Maximum Credit Adjusted Gross Income Less Than…
0 $457 $13,460 ($18,470 if married filing jointly)
1 $3,050 $35,535 ($40,545 if married filing jointly)
2 $5,036 $40,363 ($45,373 if married filing jointly)
3 or more $5,666 $43,352 ($48,362 if married filing jointly)

Now locate and complete Tax Form 8812, Additional Child Tax Credit.

Example, you have 2 qualifying children and the amount entered on Line 1 of Tax Form 8812 is $2,000.  Line 51 of your 1040 tax form has a calculated amount of $250.00.  If you meet the Earned Income Credit qualifications for married filing jointly and you have 2 dependents, you would enter $5,036.00 on Line 4a.

Subtracting $3,000 from the earned income credit leaves $2,036.00 on Line 5.  At this point, multiple the figure in Line 5 by 15% and enter this number on Line 6.

Part II of the tax form details FICA (Social Security & Medicare Taxes) and any Self-Employment Taxes.  Complete Lines 7 through 10.  Subtract Line 10 from  Line 9.  If the answer is 0 or less, enter 0 on Line 11.  Now enter the lesser of Line 11 or Line 6 and enter this figure on Line 13.  This is your Additional Child Tax Credit.