Raising children is expensive. Fortunately, the Internal Revenue Service (IRS) provides many tax benefits such as the child tax credit to help working families to make ends meet.
This is what you need to know about this potentially valuable credit.
What the child tax credit?
The child tax credit is a nonrefundable credit that can reduce taxes by nearly $ 1,000 per eligible child under the age of 17. Unlike a deduction, which reduces your taxable income a credit reduces your tax bill dollar for dollar.
However, it is important to note that the child tax credit is limited to the amount of the tax on your return, and you can not receive the excess credit as a refund
How do I know if eligible for the credit
you can take the child tax credit if you meet the following conditions:.?
- Your child is under 17 years at the end of the calendar year, and is a US citizen, US national or US resident;
- You claim the child as a dependent on your return;
- child has not provided more than half of his own support for the year;
- your child will not be a joint statement for the year unless it was only to request a refund
- Your child lived with you for more than half of the year . Temporary absences, such as school and summer camp, do not reduce the amount of time your child lived with you. If a child is born or died during the year, it counts as having lived with you for more than half of the year.
According to the IRS, these parents are included in the definition of son or daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister and a descendant of one of these
My child lives with the other parent, but I claim it. dependency exemption for him. Who takes the child tax credit?
If you are allowed to take the dependency exemption, and meet the other requirements, you can take the child tax credit, even if the child does not live with you.
Be sure to set Form 8332, Revocation of freedom of the claim of exemption for children by the custodial parent , signed by the other parent, to your return.
Am I still eligible for the credit if I have a higher income?
credit begins to eliminate your income increases. Your credit is reduced if your modified adjusted gross income is more than $ 75,000 ($ 110,000 if filing jointly or $ 55,000 if filing separately).
What is the difference between the tax credit for child and dependent care credit for children?
dependents care credits for children and is a tax benefit to help offset some of the costs of care for dependents, usually while you're at work.
This appropriation is intended to make it easier for parents to continue working without putting too much stress on their budgets.
If you have a qualifying child, the child tax credit is available regardless of your child care or other expenses.
What is the additional child tax credit?
If you are in a lower tax bracket, you can get money back from the tax credit for additional children, even if the credit exceeds your income tax for year. To be eligible for this credit, you must have earned income of at least $ 3,000.
If you have one or two children, the additional child tax credit can be as much as 15 percent of your earned income over $ 3,000.
If you have three or more children, this credit can be up to the highest amount is 15 percent of earned income over $ 3,000, or the total amount of your Social Security and Medicare taxes paid less any earned income credit.
If this sounds complicated, do not worry. TaxAct made these calculations for you.
Can I ask the child tax credit or the tax credit for additional children on the 1040EZ form?
You must file Form 1040 or Form 1040A to claim the credit. And for the opportunity to earn a refundable credit of up to $ 1,000 per child, it is well worth it.
How can I claim the child tax credit or the tax credit for additional children?
TaxAct determine if you qualify for child tax credit or the tax credit for additional children according to your answers to a few simple questions.
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