One of the most beneficial and popular federal tax credits is the Child Tax Credit. This is a non-refundable tax credit, and it’s worth up to $2,000 per qualifying child.
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Who is Considered a Qualifying Child?
The IRS considers a qualifying child to be a child that meets all of the criteria below:
Under the age of 17 at the end of the year
Has resided with you for more than half of the year
Is a relative such as your child, sibling, stepchild, stepsibling, foster child, legally adopted child, or a descendant from any of the previously mentioned individuals.
Income Limits
The amount of the credit that you receive is based on your adjusted gross income. Below is the current phase-out amounts.
Single, Head of Household or Qualifying Widow (er) – $200,000
Married filing separately – $200,000
Married filing jointly – $400,000
How to Claim the Child Tax Credit
In order to claim the child tax credit, you have to make sure that your child is considered a qualifying child. You also have to list them as a dependent on Form 1040. You will claim the Child Tax Credit on Form 1040
In order to calculate the amount of the credit, you have to fill out the Child Tax Credit Worksheet. This worksheet is automatically provided when you prepare your taxes online.
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The Additional Child Tax Credit
The Child Tax Credit is non-refundable, which means it can only be used to bring your tax liability to zero. However, you may be able to receive a portion of the credit that you could not use by claiming the Additional Child Tax Credit.
This tax credit is available so taxpayers can take advantage of the unused portion of the Child Tax Credit. The majority of the time, it is equal to the unused portion of the Child Tax Credit up to 15% of your earned income, which is more than $3000.
The Additional Child Tax Credit is refundable, which means you will receive the amount awarded in the form of a tax refund. You claim this credit on IRS Form 8812.
The IRS considers a qualifying child to be a child that meets all of the criteria below:
