The Child Tax Credit is a credit worth up
to $1,000 for each qualifying child at the
end of the year. If you have 4 children,
the credit can cut your taxes by up to
$4,000. Remember, a credit offsets your
taxes dollar for dollar. A child must
meet 5 criteria for you to receive
child-related benefits.
The child
must:
be your son, daughter, stepchild, foster
child, brother, sister or a descendant of
any of them
must be younger than 17
could not have provided more than half of
his or her own support
must live with you more than half the year
must be a U.S. citizen, U.S. national or
resident of the U.S.
Once modified adjusted gross income
(MAGI) exceeds $110,000 if Married
Filing Jointly, $55,000 if Married
Filing Separately and $75,000 for any other filing status, the
credit amount decreases by $50 for every
$1,000 or fraction of $1,000 that it exceeds
the limit.
If your credit is limited by your taxes
and your earned income is more than
$11,750, you may be eligible for additional Child
Tax Credit. You also may be eligible for
this credit if you have at least 3 eligible
children and the Social Security and Medicare
taxes you paid are more than your Earned Income
Credit.
Child Tax Credit for Individuals with Higher
Incomes
The Credit is available regardless
of your filing status. However, your credit
is reduced if your modified adjusted gross
income (MAGI) is more than:
$110,000 if Married Filing Jointly
$75,000 if Single, Head of Household or
Qualifying Widow(er)
$55,000 if Married Filing Separately
For every $1,000 (or fraction of $1,000)
your MAGI exceeds the trigger point, you
lose $50 of credit.
For example, if you file a joint return
and your MAGI is $115,000, the extra $5,000
exceeding the limit would reduce your credit
by $250. So if you have only 1 dependent
child in 2007, your credit would be $750.
If you have 2 children who qualify, then,
your credit would be $1,750 ($2,000 minus
$250).
Additional Child Tax Credit
The Child Tax Credit can't reduce your taxes
below zero. However, if your Credit
is limited by your taxes, you may be eligible
for the additional Child Credit, even
if your tax liability is zero. You may be
eligible if:
your taxable earned income is more than
$11,300
you have 3 or more eligible children and
the Social Security and Medicare taxes
you paid are more than your Earned Income Credit
If you qualify, you'll need to file Form
8812.
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