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How to Claim the Child Tax Credit

How to Claim the Child Tax Credit


Are you interested in claiming a tax credit for your child? If so, this article explains how you can take advantage of the tax benefits that come with having a child.

If you have children, you may be eligible for the Child Tax Credit which is worth up to $1,000 for each qualifying child. This credit can help reduce or eliminate your overall tax bill, and provide some financial relief for parents raising children.

However, you should note that not everyone will qualify to use this tax credit. It is important to understand the rules that apply to the Child Tax Credit, how to claim it on your tax return, and whether or not you are eligible to claim the full credit amount.

To qualify for the Child Tax Credit, you (and your child) must meet certain requirements set forth by the IRS. There are 6 tests that determine eligibility for this credit:

  1. Age Test ? the child must be under age 17 (as of the last day of the tax year)
  2. Relationship Test ? the child must be your daughter, son, stepchild, foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of those
  3. Support Test ? the child must not have provided more than half of their own support
  4. Dependent Test ? the child must be claimed as a dependent on your tax return
  5. Citizenship Test ? the child must be a U.S. citizen, U.S. national, or U.S. resident alien
  6. Residence Test ? the child must have lived with you for more than half of the  tax year

The amount of your Child Tax Credit depends on your filing status and income level. In general, the higher your income is, the lower your tax credit will be. If your adjusted gross income (AGI) is above a certain level, the amount of your credit will be ‘phased-out’ and reduced accordingly.

The 2010 phase-out thresholds for the Child Tax Credit are as follows:

  • Single or Head of Household ? AGI of $75,000
  • Married Filing Jointly ? AGI of $110,000
  • Married Filing Separately ? AGI of $55,000

For every $1,000 that exceeds the income limit, your tax credit will be reduced by $50. So even if your AGI surpasses the above amounts, you may still be able to claim this credit.

To claim the Child Tax Credit, you must use Form 1040 (U.S. Individual Income Tax Return), Form 1040A (U.S. Individual Income Tax Return ? Short Form), or Form 1040NR (U.S. Nonresident Alien Income Tax Return) to report your federal taxes. The Child Tax Credit cannot be claimed with Form 1040EZ or Form 1040NR-EZ.

If you have any questions regarding the Child Tax Credit, you may want to speak with a tax professional before filing your return. This can help you take advantage of the tax relief that is available, and keep you from claiming tax benefits that you don’t qualify for.

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