The Child Tax Credit

Answer 1

So maybe they won't clean up their room or take out the trash, but your kids can actually help you out come tax time. One popular credit that the IRS allows is the Child Tax Credit. It is a credit offered to families with children who meet certain criteria. The amount of the child tax credit can be up to $1,000 per child. It's important to remember that this is a tax credit, not a deduction. It is so much better than a deduction; the child tax credit represents a dollar-for-dollar reduction in a taxpayer's income tax liability.

Households with adjusted gross income (AGI) over certain limits will see a reduction in the child tax credit. These limits in the tax year 2010 are as follows:

AGI Limit Filing Status $110,000 Married filing jointly $75,000 Single, head of household or qualifying widow(er) $55,000 Married filing separately

In order to claim the child tax credit the child in question generally must be your son, daughter, step-son, step-daughter, or legally adopted child. They also must live in the same residence and be under the age of 17. One other thing to keep in mind if your child is employed; they must not have paid for more than half of their own support during the tax year.

In addition to the above tests to qualify for the child tax credit, the child must be a US citizen, a US resident, or a US national.

Overall, the child tax credit is certainly not a reason to go out and have more children. It cost so much more than that to raise them, but if you do have kids don't forget about this very useful and money saving credit.

For more details on the child tax credit please see IRS publication 972, entitled 'Child Tax Credit'.