10 Facts about the Child Tax Credit « 2-14-2011
The child tax credit is an important tax credit that could be worth up to $1,000 per qualifying child, depending on the income claimed on your tax return. Listed below are 10 important facts listed from the IRS for you to know about the child tax credit and how it may affect you.
1) Amount- For each qualifying child under the age of 17, you may be able to lower your federal income tax up to $1,000.
2) Qualification- To qualify for this credit the child is someone who meets the criteria of six tests: age, relationship, support, dependent, citizenship, and residence.
3) Age Test- A child must have been under age 17 at the end of 2010.
4) Relationship Test- To claim a child, they must either be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes their grandchild, niece or nephew. An adopted child is always treated as their own child. An adopted child includes a child lawfully placed with them for legal adoption.
5) Support Test- The child must not have provided more than 50% of their own support.
6) Dependent Test- The taxpayer must have claimed the child as a dependent on their federal tax return.
7) Citizenship Test- The child must be a citizen of the United States.
8) Residence Test- The child must have lived with you for more than 50% of 2010. For exemptions please see IRS Publication 972, Child Tax Credit.
9) Limitations- The credit is limited based on your adjusted gross income. The amount depends on your filing status. For married taxpayers filing a joint return, the phase out starts at $110,000. For married taxpayers filing a separate return, it starts at $55,000. For all other taxpayers, it starts at $75,000. The Child Tax Credit is limited by the amount of income tax you owe as well as any AMT you owe.
10) Additional Child Tax Credit- If you Child Tax Credit is more than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit.
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