Thursday, October 16, 2008

Child Tax Credit

If you have a child who is you son, daughter, stepson, stepdaughter, legally adopted child, brother, sister, stepbrother, stepsister, foster child (placed with you by an authorized placement agency or by court order) or a descendant of any of them you may be eligible for a Child Tax Credit. The child must also meet the Residency Test (live with you for more than 6 months out of the year), Age Test (under the age of 17 by December 31) Support Test (the child does not provide for himself more than half of his/her expenses) and be a U.S. citizen.

The child tax credit is as much as $1000 per child depending on your income. If you are married and filing jointly your credit will be reduced if your income is over $110,000.
If your status is single, head of household or widow(er) your child tax credit starts being reduced after $75,000. Finally, for married couples filing separately they credit is reduced when the income is over $55,000.

Now, the Child Tax Credit is non-refundable, however, if the Child Tax Credit is greater than the amount of income tax owed, it may be refundable through the “Additional” Child Tax Credit.

As usual, always make sure to consult with a competent accountant or tax consultant.

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