With the Child Tax Credit, you may be able to reduce your federal income tax by up to $1,000 for each qualifying child under the age of 17.
A qualifying child for this credit is someone who meets the qualifying criteria of six tests: age, relationship, support, dependent, citizenship, and residence. These criteria are discussed in the immediately following sections.
To qualify, a child must have been under age 17 - age 16 or younger - at the end of the tax year in question.
To claim a child for purposes of the Child Tax Credit, they must either be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew. An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.
In order to claim a child for this credit, the child must not have provided more than half of their own support.
You must claim the child as a dependent on your federal tax return.
To meet the citizenship test, the child must be a U.S. citizen, U.S. national, or U.S. resident alien.
The child must have lived with you for more than half of the year. There are some special rules concerning this residence test as follows: (1) A child is considered to have lived with you for all of the year if the child was born or died in the year and your home was this child's home for the entire time he or she was alive. (2) Temporary absences by you or the child for special circumstances, such as school, vacation, business, medical care, military service, or detention in a juvenile facility, count as time the child lived with you. (3) There are also exceptions for kidnapped children and children of divorced or separated parents. More details can be found in IRS Publication 972, Child Tax Credit.
Limitations Based on Modified Adjusted Gross Income
The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status. For married taxpayers filing a joint return, the phase-out begins at $110,000. For married taxpayers filing a separate return, it begins at $55,000. For all other taxpayers, the phase-out begins at $75,000.
Additional Limitation Based on Income and Amt Owed
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
If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit. This latter credit is a line item separate from the Child Tax Credit.