CHILD Tax Credit allows you to reduce your federal income tax by a maximum amount of $1,000 for each qualifying child through age 16.
A qualifying child is someone who meets the following criteria:
– Age – child is 16 or younger at the end of the year.
– Relationship – child is your son, daughter, adopted child, stepchild or eligible foster child, brother, sister, stepbrother, stepsister, or a descendant of any of these individuals or other eligible person who lived with you all year as a member of your household
– Citizenship – child is a US citizen, US national or resident of the US
– Support – child did not provide over half of his or her own support.
– Lived with you – child must have lived with you for more than half of 2008 (exception for students living outside your home).
The credit is limited if your modified adjusted gross income is above a certain amount. Phase out for 2012 begins at:
– Married Filing Jointly $110,000
– Married Filing Separately $ 55,000
– All others $ 75,000.
The Child Tax Credit is generally limited by the amount of income tax as well as any alternative minimum tax that you owe.
If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim some or all of the difference as an “Additional” Child Tax Credit. The Additional Child Tax Credit may give you a refund even if you do not owe any tax. The total amount of the Child Tax Credit and any Additional Child Tax Credit cannot exceed the maximum of $1,000 for each qualifying child.
Development
The American Tax Relief Act passed on January 01, 2013 permanently extends the $1,000 child tax credit.
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Victor Santos Sy, CPA, MBA, provides professional services in accounting and tax controversy including IRS audit defense and offers in compromise. He also advises clients on choices of entity including corporations for small businesses and LLCs for rentals. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation at 704 Mira Monte Place, Pasadena, CA 91101. The firm celebrates its 35th anniversary this year. You may email tax questions to Vic at [email protected]. You are welcome to visit our website for more than 300 tax tips at www.victorsycpa.com.
