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Child Tax Credit

Taxpayers, who claim a child as their dependent on their taxes, may also be eligible for the Child Tax Credit, which is worth up to $2,000 per child. This is one of the many tax related benefits for families with children.

Basic Things to Know About the Credit

This credit is worth up to $2,000 per child that is under 17. However, to claim this credit you have to claim the child as a dependent. There are additional things that have to be met in order for you to claim this credit.

Child Tax CreditHowever, if you qualify, it could bring your tax liability for your federal return down to zero and the remainder could come back to you in the form of a refund if you qualify for the Additional Child Tax Credit. There is no limit to how many kids you can claim, but additional dependents could cause you to have alternative minimum tax (AMT).

Qualifying for the Credit

For the most part this credit has the same rules as claiming a dependent. However, there are a few differences.

  1. Child must be related to you by blood, marriage, adoption, or foster care.
  2. The child has to have resided with you for more than six months.
  3. The child has to be 16 or younger
  4. You must provide more than half of the financial support for the child
  5. The child must be a US citizen or resident alien
  6. The child is younger than you
  7. The child does not file jointly with their spouse (some exceptions)
  8. The child is your dependent
  9. You are their parent or you have an AGI higher than the parents

Income Limitations/ Phase-outs

This credit, like many others, decreases in value as your income increases.

  • $55,000 for married couples who file separate
  • $75,000 for single, head of household, and qualifying widow(er)s
  • $110,000 for married filers

Once your income hits these numbers, the credit decreases $50 for each $1,000 above the income listed. Income is not adjusted for inflation.

Refundable Child Tax Credit

The Child Tax Credit can reduce your federal tax liability to zero and the excess amount could possibly come back to you in the form of a refund. This is known as the Additional Child Tax Credit.

If you have 1-2 kids, the child tax credit that is refundable will be smaller than the unused portion of the credit or 15% of your earned income over $3,000.

If you have three or more children, the unused portion will be larger than 15% of your income over $3,000 or the sum of Social Security and Medicare taxes paid minus your EIC.

Claiming the Child Tax Credit

Get a bigger tax refundTurboTax understands that tax season can be stressful and confusing for some. However, they make sure that their customers never miss out on a tax credit or deduction and are able to keep the maximum amount of their hard earned money while receiving the biggest refund imaginable.

You’ll be able to file your taxes soon so don’t miss out on claiming this valuable tax credit. It just might mean an extra $2,000 or more in your pocket. Few other tax credits can earn you that kind of money!

TurboTax covers more than 350 deductions and shows you which of them you qualify for. Be sure to check out their free tax refund estimator and if you ever have any tax related questions contact them at any time to have your questions answered by a tax expert.