by Chrystal Mahan

Created on: June 01, 2009   Last Updated: June 30, 2010

About the Child Tax Credit

More information can be found at the Internal Revenue Service (IRS) website : www.irs.gov and search for Publication 972 Child Tax Credit.

Overview:

As taxes rise along with the cost of living, raising a family in the new millennium was almost impossible. Many people were putting off having families and others were stopping at one. The government stepped in with The Child Tax Credit to those who have a "qualifying child." The maximum amount given for The Child Tax Credit is up to $1000 per qualifying child. The CTC is there to help those who are trying to raise a family and lessen their income tax liability. The credit will reduce your taxable income, which will lesson your tax liability. The CTC is an ideal credit for low income families. This in turn, could mean a bigger refund!

History:

The Child Tax Credit was first enacted in 2001 and has gone through many changes to date. In 2001 the CTC was non-refundable and the amount was $500. This meant it would not be included in the refund if it made the tax liability, zero. The rule was only set forth for those who had 1-2 qualifying children.

After the 2001 tax year, a new law was passed doubling the amount to $1000 and this amount will stay in effect until the year 2010.

Now there are no limits on the amount of children one can have, but there are limits on Adjusted Gross Income. Those who are married filing jointly the CTC will phase out* at $110,000; for married filing separately the phase out starts at $55,000; and for those who are single, head of household or a qualifying widower the phase out will start at $75,000.

*Phasing out for tax purposes means the income limit when your tax credit needs to start being reduced.

The Facts:

Qualifying Child:

A qualifying child is defined as:

Your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your grandchild, niece, or nephew), one who was under age 17 at the end of the tax year, one who did not provide over half of his or her own support for the tax year, one who lived with you for more than half of the tax year and one who was a U.S. citizen, a U.S. national, or a U.S. resident alien.

http://www.irs.gov/publications/p972/ar02.html

More Facts:

Adopted child. An adopted child will be treated as your own child. An adopted child includes that child which was lawfully placed with you for legal adoption.

Exceptions to time lived with you (a child was born or died

• 1
• 2
• Next Page >>