Though there are no refunds once you have children, they may be worth a credit – a tax credit, that is. Parents can benefit from the Child Tax Credit, a popular tax break that is worth $1,000 per child when you file. Your child must be claimed as a dependent on your tax return and are required to meet certain criteria to qualify for the Child Tax Credit. The child must:
- Be under 17 years old
- Have an assigned Social Security number prior to the due date of the year’s tax returns
- Be a biological child, adopted child, stepchild, or legally placed foster child
- Not provide more than 50% of their own financial support
- Be a U.S. citizen
- Have resided with you for at least half of the year
Like the Earned Income Tax Credit, The Child Tax Credit is subject to income limitations. If you exceed these thresholds, the credit amount is decreased. To claim the full $1,000 per child, your income needs to fall under the following amounts (according to filing status):
- Single and Head of Household: $75,000
- Married, filing Jointly: $110,000
- Married, filing separately: $55,000
For every $1,000 that your income exceeds these limits, the Child Tax Credit is reduced by $50. It is a non-refundable credit.
Taxpayers who earn at least $3,000 in income may qualify to claim the Additional Child Tax Credit, which can be worth as much as 15% of your taxable income over $3,000. Though the Child Tax Credit isn’t refundable, you may see some of it returned to you if you claim the Additional Child Tax Credit and your tax liability is completely fulfilled.
