2010 Child Tax Credits

Unlike a tax deduction, tax credits are deducted from the amount of tax you owe.  For each dependent child, under the age of 17 by the end of calendar year 2009, you may qualify for up to a $1,000 Child Tax Credit.  This is in addition to the deductions you list for your dependents.

To see if your children or dependents qualify, consider the following guidelines in determining eligibility for the Child Tax Credit:

1. The child must be under age 17 at the end of calendar year 2009.
2. The child must be your son, daughter, foster child, step-child, adopted child, sister, brother, step-sister, step-brother or offspring thereof.
3. The qualifying child must not have provided for more than half of their own support during the subject calendar year.
4. The qualifying child must be claimed as a dependent on your Federal Income Tax Return.  See comments below relative to children of divorced or separated parents.
5. The qualifying child must be a U. S. Citizen, a U. S. National or a U. S. Resident Alien.
6. The qualifying child must have lived with you for more than ½ of the calendar year 2009.  There are some exceptions (see IRS Publication 972 under Child Tax Credits).

The maximum amount of the Child Tax Credit is $1,000 per child and begins to phase out at certain income levels.  The phase out begins at $110,000 for married couples filing a joint return, at $55,000 for married couples filing separate returns, and for all others, at $75,000.

For children of divorced or separated parents, typically the custodial parent claims the child on his or her Federal Income Tax Returns.  Unless the custodial parent releases the dependency exemption to the non-custodial parent, the custodial parent is entitled to claim the dependent child/children (see IRS Form 8332).  You cannot claim the Child Tax Credit if you cannot claim the child or dependent on your Federal Income Tax Return.

There are other exceptions or modifications to the amount that can be claimed depending on what tax credits have been taken advantage of, including mortgage interest credit (Tax Form 8396), residential energy efficiency (Tax Form 5695 Part II) and adoption expenses (Tax Form 8839).  If you are claiming any of these tax credits, please utilize IRS Publication 972 for instructions on what amount is allowable as a Child Tax Credit for qualifying minor dependents.

For the most part, if your calculated Child Tax Credit exceeds the amount of income taxes that you owe, you will not receive a tax refund for the difference, you will simply owe no taxes.  However, there are some exceptions and these are covered under the Additional Child Tax Credit.

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