What You Should Know about the Child Tax Credit
While many aspects of tax filing, and tax season in general, are a big drag, there is one aspect of tax filing that many look forward to- their refund. For the most part, refund money isn’t “free money” from the government, its money you overpaid during the year but even so, getting some dollars back in your bank account is never a bad thing.
For parents of minor children, the Child Tax Credit is often to thank for taking at least a little off the top of your tax bill and, hopefully, adding a bit more to your refund. The Child Tax Credit, a nice perk of parenthood, is often misunderstood. Here is the break down of the qualifications and limitations of the Child Tax Credit from the IRS to help you better understand how it all works.
To learn about other tax tips for parents head over to our post “Child Tax Credit: The Cost of Raising a Child”
Child Tax Credit
Qualifications
- Age. Children must be under 17 at the end of 2015.
- Relationship. The child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother or half sister or a descendant of any of these individuals (grandchild, nice, nephew, etc.). Adopted children qualify as long as they are lawfully placed with you for legal adoption.
- Support. The child must not have provided for more than half their support for the year. (Think teenagers who work and earn quite a bit of money.)
- Dependent. The child must be a dependent that you claim on your federal tax return.
- Joint Return. The child cannot file a joint return for the year unless they are only filing a return to claim a refund.
- Citizenship. The child must be a U.S. citizen, U.S. national or a U.S. resident alien.
- Residence. In most cases, the child must have lived with you for more than half of 2015.
Limitations
- The Child Tax Credit is subject to income limitations. The limits may reduce or eliminate your refund depending on filing status and income. You must reduce the maximum credit amount ($1000 per child) if your adjusted gross income is more than $110,000 for married filing jointly, $75,000 for single head of household or qualifying widow(er), $55,000 for married filing separately.
Read the full article “Five Things You Should Know about the Child Tax Credit” on IRS.gov.
For additional, detailed information about preparing returns using the Child Tax Credit check out IRS Publications 972.
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This information is not a substitute for the legal advice of a professional. Tax laws change frequently. Please contact a licensed tax professional for help with your particular tax situation. Gary Quackenbush and his team of tax experts would be happy to help you with any questions or concerns. Please call our office at 858-549-8600 or request and appointment through the CONTACT US tab.