Child Tax Credit Tax Offset

Income Tax Child Tax Credit

The credit is 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 tax bill by up to $4,000.

Remember, a credit offsets your tax bill dollar for dollar, and the child must meet 5 criteria for you to receive child-related tax benefits.

The child must:

• be younger than 17
• be your son, daughter, stepchild, foster child, brother, sister or a descendant of any of them
• not have provided more than half of his or her own support
• live with you more than half the year
• be a U.S. citizen, U.S. national or resident of the U.S.

The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status:

• Married Filing Jointly $110,000
• Married Filing Separately $ 55,000
• All others $ 75,000

The credit amount decreases by $50 for every $1,000 or fraction of $1,000 that it exceeds the limit.

Additionally, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.

If your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim some or all of the difference as an “Additional” Child Tax Credit. The Additional Child Tax Credit may give you a refund even if you do not owe any tax. The total amount of all Child Tax Credits cannot exceed the maximum of $1,000 for each qualifying child.

If your credit is limited by your tax 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 tax you paid is more than your Earned Income Credit.

For more information see IRS Publication 972