2016 Child Tax Credit Amount

What is the 2016 Child Tax Credit Amount?

The amount of the child tax credit will change every year. Between 2015 and 2016 there no chance in the difference in the amount of the child tax credit. Further, many families with children may also be able to claim the 2016 earned income tax credit. The Child Tax Credit or also known as the CTC is worth up to $1,000 for each qualifying child for tax year 2016. This tax credit is meant to provide help to parents with qualifying children.

 

Calculating 2016 Child Tax Credit

The child tax credit has changed quite a bit since its original form. Under current IRS tax law, the child tax credit is worth up to $1,000 per child under age 17 at the end of the tax year, and is subtracted from the amount of income taxes the family owes. The 2016 child tax credit is refundable. This means that if the credit exceeds the amount of taxes the family owes, a percentage of the remaining credit is given back to the family in a refund check. This can be a big factor in the amount a tax refund that a family receives. When you receive the child tax credit back as a refund, this is known as  the Additional Child Tax Credit. A family can receive a refund worth 15 percent of earnings above $3,000, up to $1,000 per child.

 

Requirements for Claiming 2016 Child Tax Credit

In order to claim the child tax credit in 2016, a family must have more than $3,000 in earned income to claim any portion of the credit. For a family with one child, they are eligible for the credit in 2016  with incomes of $9,666 or more, families with two children when they have incomes of $16,333 or more, and for each additional child the minimum income to receive the full credit increases by $6666.

 

2016 Child Tax Credit Phaseout

However, not all families that meet this minimum income requirement can claim the childcare tax credit. The 2016 child care tax credit begins to phase out when family income reaches $75,000 for a single filer and $110,000 for couples. The phase out will allows families to claim a portion of the credit.

 

2016 Phaseout Amounts for Child Tax Credit

The amount that they can claim will depend on the amount of children that they have. It is capped at 5 percent of their income over the phase out threshold, so married couples making $130,000 ($95,000 for heads of household) with one child receive no credit at all, while families with two children are eligible for a partial payment with incomes up to $150,000 ($115,000 for heads of household) and families with more children are eligible at even higher income levels. Thus, the amount of children can really affect the credit.

 

Changes with the Child Tax Credit

President Obama has a proposal would triple the maximum allowable child care tax credit and make it available to families with higher incomes, increasing the value from $1,000 to $3,000 and the income limit to $120,000. The president’s budget would increase the EITC for taxpayers without children from $503 to about $1,000. 

 

State Child Tax Credits

Certain states have their own child tax credits that can help out certain families with children. New York and Oklahoma have state Child Tax Credits that piggyback on the federal credit. Colorado has enacted such a credit for children under age 6, but it will only go into effect when Congress enables states to tax internet sales. North Carolina and California also have state Child Tax Credits, but they are not based on a percentage of the federal credit, and New York has a second, temporary, child tax credit for 2014, 2015, and 2016 that is not based on the federal credit.