The parent or legal guardian of a dependent minor age can take a child tax credit for a child 17 or younger. The child must be age 17 at the end of the income tax year you are filing for. The maximum credit per child is $1,000.
Dependents that qualify include:
- Biological children
- Adopted children
- Foster children
- Guardian for related family member’s children (nieces/nephews)
- Provable guardianship for a dependent you are financially supporting
Additional requirements for the child tax credit include provable citizenship/resident alien status. The dependent must also not contribute 50-percent or more of income they earn toward supporting themselves.
Parental Income Limitations
Income phase-out limitations:
- Married but filing separately is $55,000
- Married but filing jointly is $110,000
- Single/Head of Household/Widow is $75,000.
For every $1,000 above the threshold for the parents’ filing status is in income, the child tax credit is reduced in $50.00 increments. For example, if a married filing jointly couple has a total income of $112,000; the child tax credit would be reduced to $900 maximum per child to account for the $2,000 in taxable income over the threshold.
Potential for Additional Child Tax Credits
Additional child tax credits exist in situations where the amount of child tax credit applied to the tax return results in a refund status. This means that the amount accrued in additional child tax credits exceeds the taxpayers’ liability. Two options exist to remedy the refund.
For families with a single child or two children, the first option is that a refundable amount equals the balance leftover after the credits and tax liabilities have been applied. The second option is to receive 15-percent of the earned income above $3,000. The Internal Revenue Service will issue the lesser of the two amounts in the form of a refund.
Families with more than two children, there is a third option available. The third option is the amount of Social Security/Medicare taxes already paid minus the earned income credit (EIC) amount.
Additional Options for Maximizing Child Tax Credits
- Members of the U.S. Military can claim income earned as combat or combat zone income to count toward the earned income required to qualify for the credit.
- If you paid out-of-pocket (out-of-pocket) for childcare and/or adoption fees before beginning the child tax credit, can claim credits for expenses paid OOP.
If you are unsure about your children, or children in your custody, qualify for the credit you can complete an EIC worksheet beforehand. An earned income tax credit calculator can help you determine the amount you’ll get back in your refund.