Here’s the good news about tax credits and how they impact the average American family. Just this year, the current child tax credit was extended through 2011 and 2012. This means that if you currently have children or considering having children, you should listen up and make sure you are getting the maximum value from the child tax credit.
The gist of the child tax credit is this. For each child, you get a $1,000 tax credit. That means for each child you have that takes at least one breath during the calendar year, you are eligible to claim that child for the purposes of this credit.
Yes, I know what you are thinking and no its not wrong. Time to move the educed labor date up a few days to make sure that baby comes before we ring in the new year.
Ok, maybe it is slightly wrong to think that, but your bank account sure will thank you.
What are others asking about the child tax credit?
How do I know if my child qualifies for this credit?
Age: Child must be 16 or younger on December 31st of the tax year in question.
Relationship: Must be a son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew. If your child is adopted, he or she will always be included as your child. (See Adoption Tax Credit)
Support: You must have provided greater than 50% of the child’s support throughout the year.
Dependent: Must be claimed as your dependent.
Citizen: Must be legal U.S. citizen, national, or resident alien.
Residence: The child must have lived under your roof for greater than 50% of the year.
Can the Child Tax Credit Be Taken in the Year of Birth?
Yes. As mentioned at the beginning of the article. Generally speaking, if the child breathes his first breath during the tax year, he is able to be claimed that year.
Is there a phase-out on the child tax credit?
Like most all tax credits, this tax credit does eventually phase out. The phaseout for the child tax credit begins at $110,000 for married filing joint; $55,000 for married filing separate; and $75,000 for all other filing statuses.
What is the additional child tax credit?
This is an excellent question. As part of more recent tax legislation, some families may be eligible to claim the Additional Child Tax Credit. If for instance you file your child tax credit and the credit exceeds the amount of your actual taxes owed, you could be eligible to receive this additional credit in the form of a tax return.
Child Tax Credit 2011 Statistics
1. Approximately 68 million children and their families will benefit from the increased child tax credit.
2. Approximately 28 million children and their families will benefit from the refundability of the child tax credit, known as the additional child tax credit.
3. Approximately 28 million families will receive a very large tax reduction due to this credit.
