Child Tax Credit Covers More Taxpayers

If you who have dependent children that are younger than 17 by the end the tax year then you may be eligible for $1 000 Child Tax Credit for each child.

Claiming the Credit To claim the Child Tax Credit there are requirements for you the qualifying child & certain limits on the credit. You must follow the same rules as claiming dependency exemption with the exception that your child must be under the age 17 before December 31 2009. In order for the child to qualify the child must not have provided their own support during the year & child must have lived with you for more than 1/2 the year. Also the child must be the taxpayer”s child adopted child stepchild grandchild eligible foster child sister brother stepbrother stepsister etc. Further qualifying child must be U.S. citizen or resident the United States.

Income Limits The Child Tax Credit that you can claim for Child Tax Cred it dependent upon the your tax liability filing status & your modified adjusted gross income. The child tax credit starts to phase out when your modified adjusted gross income is equal to $110 000 for joint filers or $75 000 for single taxpayers or $55 000 for married taxpayers who file separately. If the amount the cred it greater than your tax liability then the you may be eligible for refundable credit. This extra cred it known as the “Additional” Child Tax Credit & is discussed below.

Changes for 2009 The 2009 Recovery Act increased the eligibility for claiming the credit by reducing the earned income threshold. Previously to be eligible for the refundable portion the Child Tax Credit the taxpayer was required to have earned income excess $12 550. The Recovery Act now reduces the earned income minimum from $12 550 to $3 000.

Refund Amounts The amount the Child Tax Credit not permitted to exceed your tax liability. For example when the tax liability is zero then the Child Tax Cred it zero because there is no liability to reduce. Fortunately if you are not able to take the full amount the Child Tax Credit then you may be entitled to claim an “Additional” Child Tax Credit.

If I am Not Eligible for the Child Tax Credit then What ? In you are not eligibleto take the Child Tax Credit you may then qualify for the “Additional” Child Tax Credit. The “Additional” Child Tax Credit can be as high as $1 000 for each qualifying child. What is good about this alternative is that the “Additional” Child tax credit may be able to lower your tax liability to below zero which may entitle you receive refund for this excess.To qualify for this ” Additional” Child tax Credit you are required to have tax liability that is less than the allowable child tax credit meet the requirements the regular Child Tax Credit & earn more than $11 750 2009. If you meet these requirements then you may be entitled to receive refund for the “Additional” Child Tax Credit. To compute this Additional Child Tax Credit there are more limitations & requirements that are not within the scope this article & you should read IRS Publication 972.

Conclusion In conclusion the Child Tax Cred it nonrefundable credit that allows you if you qualify to reduce your tax liability. If you are not able to use the entire amount the $1 000 credit then you may be eligible for the “Additional” Child tax Credit which is refundable tax credit.

This article not intended to be legal or accounting advice. Tax laws are complex change constantly & each situation is unique. The reader is advised to do his or her own due diligence & consult competent professionals these areas.

Learn more about how we can help you determine if you are eligible for the Child Tax Credit & other available income tax credits & about our competitively priced paperless & internet based approach to tax preparation at affordable prices. Sandor Sandy E. Lenner MBA/CPA has been providing accounting & business services for over 35 years & enjoys working part-time at his wife”s CPA firm