Taxes what is the Child Tax Credit

While just the words IRS Tax Return cause many people to cringe, others actually look forward to tax season, at least those expecting a refund.  To increase the amount of your refund or to reduce the amount of taxes you owe this year, it is important that you familiarize yourself about all the possible exemptions, deductions and tax credits that may be available to you.  For those of you with children one of the best tax credits you may qualify for is the Child Tax Credit.

What is the Child Tax Credit?

The Child Tax Credit is an actual dollar amount that is subtracted from the amount of taxes you will owe.  It is better than a deductible which is simply subtracted from your income.  The Child Tax Credit is not given in place of the standard exemption for a dependent child but in addition.  For this year’s 2010 tax return, you may be able to deduct up to $1,000 per qualifying child, if that child meets the specific criteria required by the IRS.

According to the’s 1/30IRS Tax Tip 2010-45, which has been extended this year, there are several facts you should know when determining whether or not your child may qualify for the Child Tax Credit on your tax return:

*     Amount

For each qualifying child under the age of 17 at the end of the year you may be able to deduct $1,000.

*     Relationship

The qualifying child must be your “son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendent of any of these individuals, which includes your grandchild, niece or nephew.”  Legally adopted children are considered your own.

*     Support
To claim a child for Child Tax Credit the child must not have provided more than half of his or her own support.

*     Dependent

The qualifying child must be claimed as a dependent on your tax return.

*     Citizenship

A qualifying child must be a US citizen, US national or US resident alien.

*     Residence

The child must have lived with you for more than half of the year.  There are some exceptions to this.  Refer to IRS Publication 972, Child Tax Credit.

*     Limitations

The amount of credit you may qualify for will depend on your modified adjusted gross income and your filing status such as married, filing jointly or separately.  Also, “the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.”

*     Additional Child Tax Credit

You may be able to claim an Additional Child Tax Credit if your Child Tax Credit is more than the amount of taxes you owe.

For more information regarding the Child Tax Credit go to,id=106182,00.html.  Also check out IRS Publication 972, Child Tax Credit, available at or by calling 800-TAX-FORM (800-829-3676).

According to, the amount of the Child Tax Credit you may qualify for is usually limited to the amount of taxes you are liable for on your income tax return.  If the Child Tax Credit exceeds your liability you won’t get money refunded to you from the IRS.  Your tax liability will simply be reduced to zero.  There are some exceptions to this (depending on income) and you may qualify for a refund called the Additional Child Tax Credit.  You will need Form 8812 to determine if you qualify for this additional tax credit.

It is definitely to your advantage to check out all possible tax credits and other deductions you may qualifty for, depending on your personal circumstances and income level.  If you don’t know where to start and are feeling overwhelmed, it may be worth it in the long run to consult a professional.