If you have minor children living in your household, you may be wondering if you qualify for the Child Tax Credit.
The Child Tax Credit can help to reduce your federal income by a certain dollar amount, but the dependent has to meet certain criteria in order for you to be eligible for this credit.
Here are some of the rules and tests to keep in mind when trying to determine if you can take the Child Tax Credit:
Qualifications and Amount
A qualifying child is someone who meets the qualifying criteria for all seven tests: age, relationship, support, dependent, joint return, citizenship and residence.
If you do have a qualifying child, you will be able to reduce your federal income tax by up to $1,000.
Qualifying Tests
The child must meet all of the following criteria to be deemed a “qualifying” child in the eyes of the IRS:
- Be under the age of 17 (age 16 or younger) at the end of 2011
- Be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendent of these individuals such as a grandchild, niece, or nephew. Adopted children are also treated like your real child
- Did not provide more than half of his or her own support (you supported them)
- The child did not file a joint return for the year
- The child is a U.S. citizen, U.S. national, or U.S. resident alien
- The child lived with you for more than half of 2011. You can learn about some of the exceptions to the resident test in IRS Publication 972, Child Tax Credit
- Your income level doesn’t exceed a certain amount. For married taxpayers filing a joint return, the phase-out begins at $110,000; the phase-out for married taxpayers filing separate returns begins at $55,000. For all other taxpayers, the phase-out begins at $75,000. The Child Tax Credit is limited by the amount of the income tax and any alternative minimum taxes you owe
If the amount of your Child Tax Credit ends up being more than the total amount of income taxes you owe, you may also be able to claim the Additional Tax Credit, according to the IRS.
The Child Tax Credit is designed to help families manage the rising costs of raising their children.
Make sure you’re aware of all of the limitations and rules associated with this credit so you can file an accurate return.
