Child Tax Credit

The "Child Tax Credit" is a credit for taxpayers who have one of more qualifying children under age 17 (as of December 31) who are citizens, nationals or residents of the United States. The credit is up to $1,000 per qualifying child.

A "Qualifying Child" MUST be your:

• Son,

• Daughter,

• Stepchild,

• Foster Child*,

• Adopted Child** (this child is treated as either son or daughter),

• Brother (including half-brother),

• Sister (including half-sister),

• Stepbrother,

• Stepsister, or

• A descendant of any of them (examples: grandchild, niece, or nephew).

*A "foster child" is any child who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.

**An adopted child includes a child lawfully placed with you for legal adoption even if the adoption is NOT final. This child is considered to be a blood relative.

The child MUST have lived with you for more than half the tax year (AT LEAST 183 days or AT LEAST 184 days if a leap year).

Certain EXCEPTIONS Apply to the Residency Requirement

Kidnapped Child - If the child is presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or of the child's family, and the child shared the same principal place of residence as you for more than half of the portion of the tax year preceding the kidnapping, the child satisfies the residency requirement for you for all tax years ending during the period in which the child is missing. A missing child ceases to satisfy the residency requirement in the first tax year beginning after the calendar year in which the child is determined to be dead or, if earlier, in which the child would have attained the age of 18.

Children of Divorced or Separated Parents - A child will be treated as the NONCUSTODIAL parent's "qualifying child" if ALL of the following apply:

• The parents are divorced, legally separated or lived apart at ALL times during the LAST 6 months of tax year (calendar year from July 1 to December 31),

• The child received OVER 50% of his or her support for the tax year from the parents,

• The child is in the custody of one or both of the parents for more than half the tax year (AT LEAST 183 days or AT LEAST 184 days if a leap year), AND

• A decree of divorce, separate maintenance or written separation agreement applies to the tax year that provides the noncustodial parent to claim the child as a dependent, OR the custodial parent will sign a written declaration (usually IRS Form 8332) that he or she will NOT claim the child as a dependent for the tax year. If the divorce or separation agreement went into effect BEFORE 1985, this requirement is met if the noncustodial parent provides at least $600 for the support of the child during the tax year.

NOTE: The NONCUSTODIAL parent is the parent with whom the child lived for the LESSER portion of the tax year.

The child tax credit is used to reduce your tax liability dollar for dollar. If the credit is more than your tax liability, part or all of it may be refundable as an "Additional Child Tax Credit." It is refundable to the extent of 15% of the your earned income* in excess of the amount shown in the chart below:

NOTE: The amounts in the chart above do NOT apply if you have THREE or more qualifying children for the child tax credit. A special calculation is used which involves the amount of Social Security and Medicare taxes you have paid.

The credit is reduced or eliminated if your modified adjusted gross income is GREATER than:

• $110,000 if married filing jointly, OR

• $55,000 if married filing separately, OR

• $75,000 if the taxpayer is filing as single, head of household or qualifying widow(er).

*An election may be made to treat nontaxable combat pay as earned income for purposes of calculating the child tax credit.

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