Claiming The Child Tax Credit
The child tax credit is one of the most valuable credits you can claim because you
not only get to deduct the personal exemption for each child, but additional money at a straight value instead of a percentage. Many families are greatly relieved when they see the taxes they owe drop down significantly when this credit is applied.There are several things that you should know about the child tax credit before you apply it. The first thing you should know is the cost of the credit.
Every family who has children is able to subtract a full $1,000 per child under the age of 17 from their tax liability. This is a lot of money.
The second thing you should know is who qualifies for this credit. In order for a child to be eligible for the credit on taxes, he or she must be under the age of 17 by the end of 2009.
The child must also be related to you in some way. The child can be a son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or any number of distant relatives.
Legal adoptive children as considered to be your actual children as well. In addition, you must provide for over half of their living fees.
If you do not pay for more than half of their food, clothing and so forth, then you are not considered to support the child and you cannot claim the credit of taxes for them. This is very similar to when they ask you whether or not the child is considered to be your dependent.
You must also be able to claim the child as independent on you. In the United States it is also a requirement for the child to be a United States citizen, United States national, or United State resident alien.
In order to meet the residency requirement the child must also have lived with you for more than half of the year. There are few exceptions to this requirement, which can be found in the Children Credit tax code.
However, if you make enough money, you cannot apply this credit. The amount that you have to make to be unqualified for this tax credit depends on how you are filing.
If you are married and filing jointly you have to make more than $110,000 to be unqualified. However, if you are married and filing taxes separately, you will have to make more than $55,000 to be unqualified.
You will have to make more than $75,000 to be unqualified if you are unmarried or filing your taxes as a completely different category. The tax child credit will not add to your tax return if it takes the taxes you owe below zero.
However, if the child tax is larger than the income tax you owe you may want to look into the additional child tax credit. The additional child tax credit, unlike the normal child tax, is refundable.
It is designed for people who have a qualifying child, but did not receive the entire amount of the child tax credit because their income was too low. To be eligible for the additional child tax/credit, you must meet all of the requirements for the normal tax.
If the child tax was greater than your income tax liability and you income was less than the previously mentioned amounts you may be eligible. The additional child tax credit equal the lower of the non refundable tax or up to 15 percent of the earned income that is more than $3,000.
However, if you earn less than $3,000 and you have at least three children that meet the requirement, you might be able to an additional child tax credit of up to Social Security taxes that you paid for the year. In addition, if you are eligible for the Earned Income Tax Credit, the amount of additional child tax credit you will be able to receive is the amount of social security taxes you paid minus the Earned Income Tax Credit.
Tax code can be very confusing at times. If you feel uncertain of what you are actually eligible for, you will want to seek help from a professional or at least someone who is knowledgeable in that area.
Talk to them about what you can claim and what you cannot. You do not want to get into trouble with the IRS because you thought you were eligible for something that you were not.
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