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Deducting Dependents #1: Claiming Your Child Tax Credit

September 15th

child tax creditThere is good news for American parents. The Internal Revenue Service have announced that the child tax credit is due to remain at the $1,000-per-child level through the 2012 tax year. Parents do not even have to file any additional forms; the only requirement is that the correct amount is entered directly on the Form 1040 or 1040A.

However, parents must still fill out a work sheet beforehand to determine the correct amount owed and to avoid potential tax audits. For parents seeking to claim the additional child tax credit, there will be more paperwork required.

 

Qualifying for the Child Tax Credit

First and foremost, children must be below the age of 16 at the end of the tax year in order to qualify for the child tax credit.

The IRS will also consider the income made by all adults in the household when deciding if you are eligible. The most money is available to married couples who make less than $110,000, or to those who file as the head of household and make less than $75,000. At these levels and above, the tax credit amount begins to fall.

Also, those who already claim other tax credits may not be eligible for as much of the child tax credit. If you are unsure regarding your eligibility, contact a qualified tax lawyer for assistance. You can also consult IRS Publication 972, Child Tax Credit.

Potential Drawbacks

Unfortunately, while the tax credit may be used to erase your tax bill, it cannot be used to get you a refund. This means that it is useful for alleviating the tax burden, but for those who already owe back taxes, it is not the most efficient means of recouping losses.

Parents with more than one child under the age of 16, however, are eligible for further potential credits. Additional child tax credits typically amount to 15 percent of your total taxable income over $3,000.

 

 
 
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