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Child Tax Credit

The Child Tax Credit is a credit worth up to $1,000 for each qualifying child at the end of the year. If you have 4 children, the credit can cut your tax bill by up to $4,000. Remember, a credit offsets your tax bill dollar for dollar. A child must meet 5 criteria for you to receive child-related tax benefits.

The child must:

  • be your son, daughter, stepchild, foster child, brother, sister or a descendant of any of them
  • must be younger than 17
  • could not have provided more than half of his or her own support
  • must live with you more than half the year
  • must be a U.S. citizen, U.S. national or resident of the U.S.

Once modified adjusted gross income (MAGI) exceeds $110,000 if Married Filing Jointly, $55,000 if Married Filing Separately and $75,000 for any other filing status, the credit amount decreases by $50 for every $1,000 or fraction of $1,000 that it exceeds the limit.

If your credit is limited by your tax and your earned income is more than $11,750, you may be eligible for additional Child Tax Credit.

You also may be eligible for this credit if you have at least 3 eligible children and the Social Security and Medicare tax you paid is more than your Earned Income Credit. Child Tax Credit for Individuals with Higher Incomes

The Child Tax Credit is available regardless of your filing status.

However, your credit is reduced if your modified adjusted gross income (MAGI) is more than: $110,000 if Married Filing Jointly
$75,000 if Single, Head of Household or Qualifying Widow(er)
$55,000 if Married Filing Separately For every $1,000 (or fraction of $1,000) your MAGI exceeds the trigger point, you lose $50 of credit. For example, if you file a joint return and your MAGI is $115,000, the extra $5,000 exceeding the limit would reduce your credit by $250. So if you have only 1 dependent child in 2007, your credit would be $750. If you have 2 children who qualify, then, your credit would be $1,750 ($2,000 minus $250).

Additional Child Tax Credit

The Child Tax Credit can't reduce your tax below zero. However, if your Child Tax Credit is limited by your tax, you may be eligible for the additional Child Tax Credit, even if your tax liability is zero. You may be eligible if:

  • your taxable earned income is more than $11,300
  • you have 3 or more eligible children and the Social Security and
  • Medicare tax you paid is more than your Earned Income Credit

If you qualify, you'll need to file Form 8812.

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