The Child Tax Credit can save you money when you file taxes if you have a qualifying child. Families must have at least $3,000 in earned income to claim any portion of the credit. The refund formula means that families with one child become eligible for the full credit 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. Here are six things you should know about credit.
Amount of Child Tax Credit in 2016
Who can get Child Tax Credit?
Requirements. For this credit, the qualifying child must pass several test.
- Proof of Age . The child must have been under 17 at the end of 2014.
- Relationship Test. It must be his own son, daughter, stepchild, foster child, brother, sister, stepbrother or stepsister. The child may be a descendant of any of these people. A qualifying child could also include your grandchild, niece or nephew. You always treat a foster child as his own son. An adopted child includes a child lawfully placed with you for legal adoption.
- Support test. The child must not have provided more than half of your own support during the year.
- Dependent Test. The child must be a dependent you claim on your federal taxes.
- Test Joint Declaration. The child can not file a joint return for the year, unless the only reason we are presenting is to claim a refund.
- Proof of Citizenship. The child must be American, national US citizen or resident alien in the United States.
- Proof of Residency. In most cases, the child must have lived with you for more than half of 2014.
Limitations. The Child Tax Credit is subject to income limitations. Limits may reduce or eliminate your credit depending on marital status and income.
What is Schedule 8812?
Schedule 8812. If you qualify to claim the Child Tax Credit, be sure to check if you must complete and attach Schedule 8812 , Child Tax Credit with your tax return. For example, if you claim a credit for a child with a Personal Identification Number Taxpayer must complete Part I of Annex 8812. If you qualify to claim the Additional Child Tax Credit, you must complete and attach Schedule 8812. Visit IRS .gov to view, download or print IRS tax forms at any time.
Using Form 8812 for Child Tax Credit
The American Recovery and Reinvestment Tax Act of 2009 (ARRA) lowered the minimum income that families must earn to claim the credit to $3,000, an improvement that was extended twice, most recently through 2017 in the American Taxpayer Relief Act of 2012. Without this provision, families would probably have to earn over $13,000 in 2013 to claim the credit. The Additional Child Tax Credit (ACTC) is a refundable credit that you may receive if your Child Tax Credit is greater than the total amount of income taxes you owe, as long as you had an earned income of at least $3,000. Form 1040 (Schedule 8812) efile it, Additional Child Tax Credit, is used to figure out if you qualify for the credit and to calculate the amount of the credit you will receive.
State Child Tax Credits
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.