Tax Accounting

Mesa Tax Prep | Child Tax Credit

Children are expensive. Luckily, for most tax payers, the government helps out with that cost a little bit via the child tax credit. The child tax credit can save a ton of money come tax time. Here are a few things you should know about the child tax credit.

Amount –┬áThe child tax credit may help lower your federal income tax bill by up to $1,000 per qualifying child that you are eligible to claim on your income tax return.

Additional child tax credit – If you qualify and get less than the full $1,000 per qualifying child, you could receive a refund even if you owe no income tax by using the additional child tax credit.

Qualifications – To be considered a qualifying child, the child must pass several tests:

  • Age – The child must have been under the age of 17 at the end of the tax year.
  • Relationship – The child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother or stepsister. The child could also be a descendant of any of these people which means grandchildren, nieces and nephews qualify. Adopted children are always treated as your child.
  • Support – The child cannot provide more than half of their own support.
  • Dependent – The child must be a dependent you claim on your return.
  • Joint Return – The child cannot file a joint return for the year, unless the only reason they file is to claim a refund.
  • Citizenship – The child must be a US citizen, US national or US resident alien.
  • Residence – The child must have lived with you for more than half the year, in most cases.

Limitations – The child tax credit and additional child tax credit are subject to income limitations. The credits are phased out for higher income taxpayers.

If you have any questions or would like to discuss this further, don’t hesitate to contact us at Dusseau & Makris, PC, your Phoenix CPA firm.