What Is The Child Tax Credit?

by | Nov 15, 2018 | Top Accounting Tutorials | 0 comments

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What Is The Child Tax Credit?

Here are some important facts about the Child Tax Credit:

Our KIDucator tax educator tool will help you find out if you are eligible to claim the Child Tax Credit on your tax return. This is a multi-year tool so you can use it for previous years’ tax returns as well!

Find out if your child qualifies you for the Child Tax Credit!

To qualify for the Child Tax Credit, you must have a child or dependent who meets all of the following requirements:

The child must have been 16 or younger on December 31 of the tax year.

The child must be a United States citizen, a United States national, or a resident alien.

The child must be claimed as a dependent on your tax return.

The child must be related to you in one of the following ways: son, daughter, stepson, stepdaughter, brother, sister, stepbrother, stepsister, grandchild, niece, or nephew. This includes any legally adopted child, any child lawfully placed with you in preparation for adoption, and any foster child lawfully placed in your care.

The child must have lived with you for more than half of the year (stayed with you for at least 183 nights). Temporary absences for special circumstances are generally acceptable, and special rules may apply if you are divorced or for certain other circumstances. For more details, please see Publication 972, Child Tax Credit.

The child must NOT have provided more than half of his or her own financial support for the year.

The Additional Child Tax Credit (ACTC) is a refundable credit that you may receive if your Child Tax Credit is greater than the total amount of income taxes you owe, as long as you had an earned income of less than $2,500. For 2018 returns, the ACTC is worth $1,400.

Form 1040 (Schedule 8812) efile it, Additional Child Tax Credit, is used to figure out if you qualify for the credit and to calculate the amount of the credit you will receive. Efile.com will do all required math and generate the form for you when you prepare your return.

For more information on the Child Tax Credit, please consult Publication 972 – Child Tax Credit.

For 2018, the Child Tax Credit is at least partially refundable if you had an earned income of less than $2,500. This refundable portion is not available to taxpayers with earned income above $2,500. Partially refundable means that some of the credit is nonrefundable and some is refundable and the amounts will be reported in two separate sections of your return. A nonrefundable credit means that the credit cannot be used to increase your tax refund or to create a tax refund when you don’t already have one. Refundable tax credits, on the other hand, are treated as payments of tax you made during the year. When the total of these credits is greater than the tax you owe, the IRS sends you a tax refund for the difference.

Only one taxpayer (or married couple filing jointly) may claim any one child for the purposes of the Child Tax Credit and the Additional Child Tax Credit. If a child is claimed as a dependent on more than one tax return, the IRS will determine who gets the claim according to a set of tiebreaker rules.

Learn what happens when a child is claimed by more than one person as a dependent.

Here are other ways you can save taxes on raising children: 

When you prepare your tax return on efile.com, we will automatically check to see if you qualify for the Child Tax Credit. If you qualify for the credit, the exact amount will be calculated for you. We will select the right form and fill it out in order for you to get your maximum credit amount.

See what other tax credits and tax deductions may be available to you.

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