The Child Tax Credit
The Child Tax Credit allows you the possibility to reduce your Federal tax liability by $1000 for each qualifying child under the age of 17.
The Child Tax Credit
In order to claim the Child Tax Credit, the child in question must be under the age of 17 as of the end of the tax year. They also must be a son, daughter, adopted child, stepchild, or eligible foster child. They could also be the descendents of any of those which would mean grandchildren. They must be citizens of the United States or resident aliens. You have to have provided at least half of the support for them.
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The children in question would have to have lived with you for at least half of the year as well. There are some exceptions to these criteria. There is also a phase out income level. The phase out income level is the point where the percentage of the credit begins to decline until it is no longer allowed. For a married couple filing jointly this phase out level is $110,000 of adjusted gross income. It is $55,000 for married filing separately and $75,000 for all others.
Although you can only take a credit up to the amount of actual tax owed, it is possible to take any amount that is left over as an Additional Child Tax credit. This is a refundable credit. It means that if your credit exceeds the amount of tax you owe, you will get a refund of the difference. You get this refund regardless of the amount of money that has been withheld from your pay.
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The total of the Child Tax Credit and the Additional Child Tax credit can not exceed the $1000 dollar total for a single qualifying child. The Child Tax Credit is claimed on either the Form 1040 or 1040A.
Since many tax credits have had the effect of encouraging some activity that is beneficial to society as a whole, some people have questioned the idea of a Child Tax Credit. Many believe that increasing the population by having larger families is not in the best interest of society anymore. The Child Tax credit does not really have that goal in mind. It is recognition of the cost of child rearing and an attempt to reduce the tax burden on parents for the benefit of the children.