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The Child Tax Credit

 

The Child Tax Credit

A Tax Break for People Who Have a Qualifying Child

by Jason Summers

One of the most valuable and popular Federal tax credits is the Child Tax Credit.

The Child Tax Credit is a non-refundable credit that’s worth up to $1,000 per qualifying child.

What Is a Qualifying Child?

For IRS purposes, a qualifying child must meet the following requirements:

• He/she is under the age of 17
• He/she lived with you for more than half of the year
• He/she is claimed as a dependent on your tax return
• He/she is a U.S. citizen, U.S. national, or U.S. resident alien. The child must have a valid Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). If the child has an ITIN, you will need to complete Part I of IRS Schedule 8812 (Child Tax Credit).
• He/she is closely related to you. This means that the qualifying child is your son, daughter, stepchild, sibling, stepsibling, grandchild, or nephew/niece

Are There Income Limits?

The amount you can claim for the Child Tax Credit decreases for taxpayers whose adjusted gross income (AGI) passes a certain threshold, based on filing status:

• Single: $75,000
• Married Filing Separately: $55,000
• Married Filing Jointly: $110,000
• Head of Household: $75,000
• Qualifying Widow(er): $75,000

How Do I Claim the Child Tax Credit?

In order to claim the Child Tax Credit, first make sure you check the box next to each qualifying child who’s listed as a dependent on Page 1 of your Form 1040 or Form 1040A.

The Child Tax Credit is claimed on the second page of your Form 1040 (Line 51) or Form 1040A (Line 33).

In order to determine the amount of the credit, fill out the “Child Tax Credit Worksheet” included in the Instructions for Forms 1040 and 1040A. For most taxpayers, the computation is straightforward.

If you are unsure about your eligibility for the Child Tax Credit, you can use the Interactive Tax Assistant (ITA) provided on the IRS.gov website to help you.

What About the Additional Child Tax Credit?

Since the Child Tax Credit is non-refundable, it cannot be used to reduce your tax liability beyond zero. However, if you cannot use the full value of the Child Tax Credit that you’re eligible for, you may be able to claim the Additional Child Tax Credit to receive a portion of the credit you couldn’t use.

The Additional Child Tax Credit is intended for taxpayers who aren’t able to take full advantage of the regular Child Tax Credit because they do not owe enough tax. For most taxpayers, the Additional Child Tax Credit is equal to the unused portion of their Child Tax Credit, up to 15% of your earned income that exceeds $3,000.

The Additional Child Tax Credit is refundable, which means it can reduce your tax liability beyond zero, possibly resulting in a tax refund. This credit is claimed on the second page of your Form 1040 (Line 65) or Form 1040A (Line 39).

Note that in order to claim the Additional Child Tax Credit, you will need to file IRS Schedule 8812 (Child Tax Credit). Use Parts II – IV of Schedule 8812 to determine the amount of your Additional Child Tax Credit.

For more information, please see IRS Publication 972 (Child Tax Credit).