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Ten Facts About the Child Tax Credit

Ten Facts About the Child Tax Credit

For many families, the Child Tax Credit is a means to reduce your tax liability depending on your income. However, it is important to understand what makes you eligible to qualify for this credit. By working with an accountant from Zebulon Tax in Springfield, NJ, you can determine if this credit can reduce the tax liability for your family. Below are ten important facts you need to know about the child tax credit.

Amount – Based on the tax year, you may be able to reduce your federal income tax by up to $1,000 per each child. According to IRS.gov, the $1,000 amount is the maximum per child, but can be claimed for each qualifying child.

Qualification       For a child to qualify, they must meet all six aspects of the criteria. They much have a relationship with you as the taxpayer, be the appropriate age and you must provide their support. Additionally, they need to be a dependent, a citizen and a resident within your household.

Age Test – The child must be under the age of 17 at the end of the applicable tax year. If the child turned 17 during that tax year, they would not be able to qualify for this credit.

Relationship Test – When deciding if a child qualifies for you to claim them for the Child Tax Credit, they must have one of the following relationships with you as the taxpayer.


    • Son
    • Daughter
    • Foster Child
    • Brother/Sister
    • Stepsister/Stepbrother
    • Descendent of any of the above individuals, which includes your grandchildren, niece or nephew

If you have adopted a child, then they should be treated as your biological child. This would also include any children that have been placed with you for the purpose of pursuing a legal adoption. Working with your accountant, you can determine if any child within your custody or living with you will qualify based on the relationship test.

Support Test – For a taxpayer to claim a child under the Child Tax Credit, the taxpayer must have been responsible for supporting that child. In addition, the child cannot have earned enough income to have provided over half of their own support. If they have done so, then they would not be able to count as a qualifying child, even if they meet the other criteria.

Dependent Test – Even if the child lives with you and you provide support, if you are not claiming the child as a dependent on your federal tax return, then you cannot claim them for the purpose of the Child Tax Credit. This is true even if the child lives with you or meets other eligibility requirements.

Citizenship Test – In order to be claimed for the Child Tax Credit, the child needs to meet the U.S. citizenship requirement. That means they must be a citizen, U.S. national or U.S. alien resident. Proof maybe required, but it is best to consult with your accountant at Zebulon Tax about any additional documentation needed to claim this credit.

Residence Test – To claim the child for the credit, the child also must have lived with you for at least half of the applicable tax year. While this applies for all families, there are exceptions when dealing with shared custody situations, as encountered by families with divorced or separated partners. Consult with your tax professional or accountant to determine your eligibility to claim your child if this is your situation.

Limitations – The credit does have a limit, but this is based on your modified gross income being higher than a specific amount. This amount is based upon your filing status. For example, if you are married and filing jointly, then the phase out will appear at $110,000. If you are married but filing your own return, then the limit begins at $55,000. All other taxpayer situations have the phase-out beginning at $75,000. Another potential limit is the amount of actual income tax owed, in addition to any alternative minimum tax you might owe.

Additional Child Tax Credit – If your Child Tax Credit amount is higher than then your tax liability, you might be able to claim the Additional Child Tax Credit. Again, it is best to discuss this with a tax professional at Zebulon Tax and determine if you will be able to claim the additional credit.

Finally, it is important to note that this credit does have some limitations, but a vast majority of parents will be able to save using this credit. Call or click on the link below to contact Zebulon Tax in Springfield, NJ, and see how they can assist you to claim all of your qualifying credits

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