Child Tax Credit and Additional Child Tax Credit
The Child Tax Credit is intended to offset the extra cost it takes to raise children and can be worth as much as $1,000 per child.
The Child Tax Credit begins to phase out at adjusted gross incomes of $75,000 for single filers (and heads-of-household), $110,000 if married filing jointly, and $55,000 if married filing separately. When figuring your income for the purposes of this credit, you must include any foreign income exclusions.
The credit is non-refundable, so your credit cannot be greater than the amount that reduces your tax liability to $0. In this case, however, you may qualify for the Additional Child Tax Credit.
Claiming the Child Tax Credit:
During the efile.com online tax interview you will be prompted to enter the necessary information. The necessary forms will be generated for you based on your answers.
For more details about the Child Tax Credit, you may review Publication 972, Child Tax Credit.
The following tests must be satisfied in order to claim a dependent as a qualifying child for the purposes of the Child Tax Credit:
Age Test:
The child must have been 16 or younger on December 31.
Citizenship Test:
The child must be a United States citizen, a United States national, or a resident alien.
Dependent Test:
The child must be claimed as a dependent on your tax return.
Relationship Test:
The child must be related to you in one of the following ways: son, daughter, stepson, stepdaughter, brother, sister, stepbrother, stepsister, grandchild, niece, or nephew. This includes any legally adopted child, any child lawfully placed with you in preparation for adoption, and any foster child lawfully placed in your care.
Residency Test:
The child must have lived with you for more than half of the year (stayed with you for at least 183 nights). Temporary absences for special circumstances are generally acceptable, and special rules may apply if you are divorced or for certain other circumstances. For more details, please see Publication 972, Child Tax Credit.
Support Test:
The child must not have provided more than half of his or her own financial support for the year.
Additional Child Tax Credit
The Additional Child Tax Credit (ACTC) is a refundable credit that you may receive if your Child Tax Credit is greater than the total amount of income taxes you owe. The American Recovery and Reinvestment Act of 2009 made the ACTC available to more families and increased the amount of credit available.
Form 8812, Additional Child Tax Credit, is used to figure out if you qualify for the credit and to calculate the amount of the credit you will receive. The eFile tax software will do all required math and generate the correct form for you.
Other Child-Related Tax Savings:
You will be able to claim a standard exemption for each qualifying child.
You may be able to deduct up to $3,000 per dependent with the Child and Dependent Care Tax Credit.
If your child was adopted, be sure to look into the Adoption Tax Credit.
For more information on the Child Tax Credit, you may consult Publication 972, Child Tax Credit.