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Facts about the Child Tax Credit

Published: February 25, 2011 10:57 AM

The federal Child Tax Credit may be worth as much as $1,000 per qualifying child. Read on for important facts about this credit and how it benefits families.

The credit reduces federal income tax by up to $1,000 for each qualifying child under the age of 17. For this credit, a qualifying child is one who meets the criteria of six tests: age, relationship, support, dependent, citizenship, and residence.

Age Test. The child claimed must have been age 16 or younger at the end of 2010.

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Relationship Test - The child claimed must either be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew. An adopted child is always treated as your own child, to include a child lawfully placed with you for legal adoption.

Support Test. The child must not have provided more than half of his/her own support.

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

Citizenship Test. " The child must be a U.S. citizen, U.S. national, or U.S. resident alien.

Residence Test. With a few exceptions, the child must have lived with you for more than half of 2010.

The credit is limited for taxpayers whose modified adjusted gross income is above a certain amount " the amount at which phase-out begins varies depending on filing status. For married taxpayers filing a joint return, the phase-out begins at $110,000. For married taxpayers filing separately, it begins at $55,000. For all other taxpayers, the phase-out begins at $75,000. Also, the credit is generally limited by the amount of the income tax owed as well as any alternative minimum tax owed.

If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit.

The exceptions to the residence test and other details on this credit can be found at www.irs.gov (IRS Publication 972, Child Tax Credit).


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