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. Here are 10 important facts about Child Tax Credit:

• Amount:

  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.

• Qualification:

  A qualifying child for this credit is someone who meets the qualifying criteria of six tests: age, relationship, support, dependent, citizenship, and residence:

• 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.

• 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. national, or U.S. resident alien.

• Residence Test:

  The child must have lived with you for more than half the year.

• 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.

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Forms

8812 – Child Tax Credit
Publication 972 – Child Tax Credit
Publication 4117 – Additional Child Tax Credit