34. Child Tax Credit
Introduction
The child tax credit is a credit that may reduce your tax by as much as $1,000 for each of your qualifying children.
The additional child tax credit is a credit you may be able to take if you are not able to claim the full amount of the child tax credit.
This chapter explains the following.
- Who is a qualifying child.
- How much is the credit.
- How to claim the credit.
- Why you should check your tax withholding.
If you have no tax.
Credits, such as the child tax credit, the adoption credit, or the credit for child and dependent care expenses, are used to reduce tax. If your tax on Form 1040, line 46, or Form 1040A, line 28, is zero, do not figure the child tax credit because there is no tax to reduce. However, you may qualify for the additional child tax credit on line 68 (Form 1040) or line 41 (Form 1040A).Useful Items - You may want to see:
Publication
Form (and Instructions)
- 8812 Additional Child Tax Credit
- 8901 Information on Qualifying Children Who Are Not Dependents
- W-4 Employee's Withholding Allowance Certificate
Qualifying Child
A qualifying child for purposes of the child tax credit is a child who:
- Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your grandchild, niece, or nephew),
- Was under age 17 at the end of 2007,
- Did not provide over half of his or her own support for 2007,
- Lived with you for more than half of 2007 (see below), and
- Was a U.S. citizen, a U.S. national, or a resident of the United States. If the child was adopted, see below.
For each qualifying child you must either check the box on Form 1040 or Form 1040A, line 6c, column (4), or complete Form 8901 (if the child is not your dependent).
Example —
Your son turned 17 on December 30, 2007. He is a citizen of the United States and you claimed him as a dependent on your return. He is not a qualifying child for the child tax credit because he was not under age 17 at the end of 2007.
Exceptions to time lived with you.
A child is considered to have lived with you for all of 2007 if the child was born or died in 2007 and your home was this child's home for the entire time he or she was alive. Temporary absences for special circumstances, such as for school, vacation, medical care, military service, or detention in a juvenile facility, count as time lived at home. There are also exceptions for kidnapped children and children of divorced or separated parents. For details, see , in chapter 3.Qualifying child of more than one person.
A special rule applies if your qualifying child is the qualifying child of more than one person. For details, see , in chapter 3.Adopted child.
An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption. If you are a U.S. citizen or U.S. national and your adopted child lived with you as a member of your household all year, that child meets condition (5) above to be a qualifying child for the child tax credit.Amount of Credit
The maximum amount you can claim for the credit is $1,000 for each qualifying child.
Limits on the Credit
You must reduce your child tax credit if either (1) or (2) applies.
- The amount on Form 1040, line 46, or Form 1040A, line 28, is less than the credit. If this amount is zero, you cannot take this credit because there is no tax to reduce. But you may be able to take the additional child tax credit. See later.
- Your modified adjusted gross income (AGI) is above the amount shown below for your filing status.
- Married filing jointly - $110,000.
- Single, head of household, or qualifying widow(er) - $75,000.
- Married filing separately - $55,000.
Modified AGI.
For purposes of the child tax credit, your modified AGI is your AGI plus the following amounts that may apply to you.- Any amount excluded from income because of the exclusion of income from
Puerto Rico. On the dotted line next to Form 1040, line 38, enter the amount excluded and identify as “EPRI.” Also attach a copy of any Form(s) 499R-2/W-2PR to your return. - Any amount on line 45 or line 50 of Form 2555, Foreign Earned Income.
- Any amount on line 18 of Form 2555-EZ, Foreign Earned Income Exclusion.
- Any amount on line 15 of Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa.
AGI.
Your AGI is the amount on Form 1040, line 38, or Form 1040A, line 22.Claiming the Credit
To claim the child tax credit, you must file Form 1040 or Form 1040A. You cannot claim the child tax credit on Form 1040EZ. You must provide the name and identification number (usually a social security number) on your tax return (or Form 8901) for each qualifying child.
Answer the Questions in your form instructions for Form 1040, line 52, or Form 1040A, line 32, to find out which child tax credit worksheet you can use to figure the credit.
If you answer “Yes” to question 1, 2, or 3 in your Form 1040 instructions or question 1 or 2 in your Form 1040A instructions, you must complete the child tax credit worksheet in Publication 972. Otherwise, you can use the Child Tax Credit Worksheet in your Form 1040 or Form 1040A instructions. (See , later.)
Additional Child Tax Credit
This credit is for certain individuals who get less than the full amount of the child tax credit. The additional child tax credit may give you a refund even if you do not owe any tax.
How to claim the additional child tax credit.
To claim the additional child tax credit, follow the steps below.- Make sure you figured the amount, if any, of your child tax credit. See , earlier.
- If you answered “Yes” on line 4 or line 5 of the Child Tax Credit Worksheet in the Form 1040 or Form 1040A instructions, or line 13 of the Child Tax Credit Worksheet in Publication 972, use Form 8812 to see if you can take the additional child tax credit.
- If you have an additional child tax credit on line 13 of Form 8812, carry it to Form 1040, line 68 or Form 1040A, line 41.
Checking Your Withholding
The child tax credit decreases your tax. You can check your tax withholding by using Publication 919, How Do I Adjust My Tax Withholding.
If you are having too much tax withheld, and you prefer to have the money during the year, you may be able to decrease your withholding. You do this by completing a new Form W-4 and giving it to your employer.
Example
Amy Brown files as head of household and has two dependent children under age 17. The children are qualifying children for purposes of the child tax credit. Amy's only income is her salary of $30,350. Amy chooses to itemize her deductions and files Form 1040. Her AGI, shown on line 38 of her Form 1040, is $30,350. This is her taxable earned income.
Amy does not file Form 2555, 2555-EZ, or 4563. She does not exclude income from Puerto Rico. Her modified AGI is $30,350.
Amy's tax, shown on line 46 of her Form 1040, is $1,334. She claims a $225 credit for child and dependent care expenses on line 47. She claims a $1,029 earned income credit on line 66a. She has no other credits.
After answering the Questions in the Form 1040 instructions for line 52, she completes the child tax credit worksheet to figure her child tax credit of $1,109. Amy's completed questions and child tax credit worksheet are shown later.
Amy reads the TIP in the worksheet and finds that she may be able to take the additional child tax credit. See and Amy's completed Form 8812, later.
Filled-in Questions for Amy Brown
Filled-in Questions for Amy Brown (Page references are to the Form 1040 instructions.
Summary: These are the questions for the taxpayer to use to determine if she should use Pub. 972 to determine the child tax credit she can claim. They are answered per the example in the text.
- “1.Is the amount of Form 1040, Line 38, more than the amount shown below for your status? No. Continue” checkbox checked
- “2. Are you claiming any of the following credits? No. Continue” checkbox checked
- “3. Are you excluding income from Puerto Rico or are you filing any of the following forms?” checkbox checked
Filled-in child tax credit worksheet for Amy Brown
Flowchart - Does the 50% Limit Apply to Your Expenses?
Filled-in Form 8812
Form 8812 Additional Child Tax Credit 2006
Summary: This is an example of Form 8812 completed per the information in the text with these line items completed:
| Name(s) shown on return field contains Amy Brown | |||||||
| Your social security number field contains 012-00-5678 | |||||||
| Under Part I: All Filers: | |||||||
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| Under Part III Your Additional Child Tax Credit: | |||||||
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