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Child Tax Credit |
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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 and may be refundable. See Definition of "Qualifying Child" below. 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:
*Nontaxable combat pay is treated as "earned income" for purposes of calculating the child tax credit. NOTE: If you have THREE or more qualifying children for the child tax credit, you may choose to use an alternative formula which involves the amount of Social Security and Medicare taxes you have paid to calculate the refundable portion of the additional child tax credit. The child tax credit is reduced or eliminated if your modified adjusted gross income is GREATER than:
To be a "qualifying child" for purposes of the "child tax credit", the child MUST meet the following SEVEN requirements: 1. Relationship The child MUST be your:
*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. 2. Age On December 31, the child must be UNDER age 17. 3. Residency The child MUST live with you for more than half the tax year (AT LEAST 183 nights or AT LEAST 184 nights if a leap year. These nights do NOT need to be consecutive). Certain EXCEPTIONS Apply to the Residency Requirement Birth or Death of Child - A child who was born or died in the tax year is treated as having lived with you for all of the year if your home was the child’s home the entire time he or she was alive in the tax year.Temporary Absences - Count time that you or your child is away from home on a temporary absence due to a special circumstance as time lived at home. Examples of a special circumstance include:
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 (including parents who were never married) - A child will be treated as the NONCUSTODIAL parent's "qualifying child" if ALL of the following apply:
NOTE: The CUSTODIAL parent is the parent with whom the child resides for the GREATER number of nights* during the tax year. *A child resides with a parent for the "night" if the child sleeps at the parent's residence. It does not matter if the parent is present that night. If the child is sleeping at a home not belonging to either parent, then the child will be considered sleeping in the home of the parent with whom the child would have resided for the night but for the absence. However, if it cannot be determined with which parent the child would have resided for the night OR if the child would not have resided with either parent, then NEITHER parent can count that night. If a night extends over two tax years, then the "night" is allocated to the tax year in which the night begins. For example, the night of December 31, 2011 is allocated to tax year 2011. If the child resides with each parent for an 'equal' number of nights during the tax year, then the custodial parent is the parent with the HIGHEST adjusted gross income (AGI) for the year. Exception for Parent Who Works at Night - If, during the tax year, due to a parent’s nighttime work schedule, a child resides a greater number of days but not nights with the parent who works at night, that parent is treated as the custodial parent. On a school day, the child is treated as residing at the primary residence registered with the school. 4. U.S. Citizen, U.S. Resident, or U.S. National The child MUST be a citizen, resident, or national of the United States. Exception for Adopted Children The U.S. Citizen or resident requirement does NOT apply to your legally adopted child if the child's principal place of residency is your home, the child is a member of your household the entire tax year, and you are a citizen or national of the United States. 5. Child is NOT Self-Supporting The child CANNOT provide over 50% of his or her own support.
6. Claiming Exemption for Qualifying Child for Child Tax Credit Purposes
You MUST be able to claim a dependent
exemption for the qualifying child to claim the child tax credit. If the child is married, the child cannot be filing a joint return with his or her spouse. EXCEPTION: A joint tax return may be filed if solely to claim a refund AND the married couple is NOT required to file AND no tax liability would exist for either spouse if they had filed tax returns as married filing separately. What Happens if the Child is a "Qualifying Child" of MORE THAN One Person? If the child is a "qualifying child" of a parent or parents and neither parent claims the child as a qualifying child, then the child CANNOT be a qualifying child of any other taxpayer UNLESS the adjusted gross income of that taxpayer is HIGHER than the highest adjusted gross income of any parent of the child. If the child meets
the above requirements to be a "qualifying child" of more than one person
and you and the other person(s) cannot agree who will claim the child as a
"qualifying child" and more than one of you actually claim the child, then
the following tie-breaker rules which are listed in
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Click here to return to "Frequently Asked Tax Questions" |
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