The Child Tax Credit was instilled to assist parents with offsetting the costs associated with raising children. Taxpayers that qualify for the credit can claim a maximum of $2,000 per qualifying child. Keep in mind that this is not a deduction; it is a credit. Tax credits reduce the amount of tax you pay. A deduction reduces taxable income amounts.
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Determining Qualifying Status
In order to claim the child tax credit, you have to make sure that your child is considered a qualifying child. Such as your child, sibling, stepchild, stepsibling, foster child, legally adopted child or a descendant from any of the previously mentioned individuals.
Can Any of My Child Tax Credit Be Received as a Refund?
There are circumstances in which your tax liability can be reduced to zero before applying any Child Tax Credits. It can also become a circumstance where you could be owed money, known as the Additional Child Tax Credit. Some or all of the amount owed may be issued in the form of a refund.
What are the Requirements to Qualify for the Child Tax Credit?
It is important to check for updated income threshold requirements in order to qualify for the Child Tax Credit. You will also be able to double-check your children’s qualifying statuses.
How is the Child Tax Credit Claimed on Tax Returns?
Claiming either a Child Tax Credit or Additional Child Tax Credit is rather easy, especially if you file online. Using an e-file option automatically tells you if you are eligible for the credit and will help you claim the child tax credit.
As you work through the questions, the software will identify that you have children. It will prompt you to complete a worksheet (in most cases) to determine your eligibility for the credit.
Filing your taxes using online tax preparation software is the surest way to know if you qualify for the Child Tax Credit or Additional Child Tax Credit. Try the free online tax calculator to how your refund will be.