Claiming the Child Tax Credit
If you have a qualifying child, you may claim the Child Tax Credit on either Form 1040 or 1040A.
Claiming the Child Tax Credit
The Child Tax Credit allows you to reduce your Tax by $1000 for each qualifying child as long as your adjusted gross income is below a certain level. This level is known as the phase out level and once it is reached your credit is gradually phased out until it no longer exists. The level is $110,000 for a married couple filing jointly and $55,000 for filing separately. For all other taxpayers the level is $75,000.
In order to be qualified for the Child Tax Credit, the child must be under the age of 17 at the end of the tax year. They must have lived with you for more than half of the year and be citizens of the United States or resident aliens. The taxpayer must have provided at least half of the support for the child for the year. Certain conditions apply for the restrictions on living with the taxpayer. Vacations, time away in schools, or even time kidnapped or in a juvenile detention facility count as time lived with the taxpayer.
Once the status of qualified child is determined, the Tax Credit is claimed by completing the Child Tax Credit Worksheet that is included as part of Publication 972 (2006) that is included with the 1040 and 1040A tax packages. The Worksheet and its instructions appear at first to be very difficult and complex, but in reality they are really quite simple to complete. The instructions walk you through it in a very simple and straightforward manner and the figures needed to complete the worksheet come from easily accessible figures relating to other credits claimed and your adjusted gross income and tax liability.
It is possible that the Child Tax Credit will reduce your tax liability to zero. If this happens and you have not used all of your Child Tax Credit, it is possible to go on to Form 8812 to claim the additional Child Tax Credit. This is called a refundable tax credit and it could result in a refund paid to you even above the amount withheld from your paycheck. Again the form follows a simple step by step process that determines how much refundable credit you are allowed to claim.
The Child Tax Credit and the Additional Child Tax Credit exist to ease the tax burden on parents. The qualifying children can be more than just sons and daughters. Adopted children, or even children placed in your home awaiting adoption, qualify. Stepchildren and even certain Foster children are also included. Grandchildren could be considered if the other qualifications for residence and support are met.