With the Child Tax Credit, you may be able to reduce the federal tax you owe by $600 for each qualifying child under the age of 17, according to the IRS. A qualifying child for this credit is someone who:
â Is claimed as your dependent,
â Was under age 17 at the end of 2001,
â Is your son, daughter, adopted child, grandchild, stepchild, or eligible foster child, and
â Is a U.S. citizen or resident.
The credit is limited if your modified adjusted gross income is above a certain amount. The total creditânot the per child amountâis reduced by $50 for each $1,000 (or part thereof) that your adjusted gross income exceeds the threshold amount. The amount at which this phaseout begins varies depending on your filing status:
â Married Filing Jointly $110,000
â Married Filing Separate $ 55,000
â All others $ 75,000
The Child Tax Credit reduces the amount of tax you owe. In addition, if the credit you are eligible to claim exceeds your tax liability, you can claim the difference as a refund. The IRS provides a one-page worksheet (Form 8812) for you to figure your credit and possible refund.
You may claim the child tax credit on Form 1040 or 1040A.
Contact your tax preparer to see how you may be able to take advantage of the child tax credit.
This daily Tax Tip has been provided by the Internal Revenue Service.