Claiming Child Tax Credit – Do You Qualify?

Taxes are a complicated mess that has to be waded through once a year. As that times rolls towards us again, let’s take a second and look at what might be some good news about taxes for once: tax credits. A tax credit is a way for you to reduce the amount of taxes you owe in a given year. If you are late to file your taxes this year and you have children, you need to pay attention to this article. It seems like we have been inundated with them lately: the $6,500 homebuyer tax credit , Cash For Clunkers, Making Work Pay , and of course the child tax credit. Tax credits come in two varieties: refundable and non-refundable. A refundable tax credit can actually increase your tax refund, letting you go to the profit side of the tax equation, while a non-refundable tax credit is limited to zeroing out your tax burden for a year. One of the most common tax credits to qualify for are child tax credits. Here’s a little more info about the child tax credit. The Child Tax Credit A child tax credit is a non-refundable tax credit provided for families that have children that meet certain eligibility requirements. We will get to what it takes to qualify for a child tax credit in a second, but let’s look at what the credit will give you. You can earn up to $1000 in tax credits per qualifying child, which means that your taxes for that year are a grand less per child. Because this is a non-refundable credit, you can ‘go positive’ thanks to the credit when combined with other credits. For example, say you have three children that meet the requirements and your total taxes for the year were $2500. You could claim up to $2500 for your children, but not the full $3000. However, when combined with other tax credits, the child tax credit can push you into the positive side of things, but keep in mind that child tax credits on their own will not do so. So how can you tell if you qualify? This is where things get a little complicated. There are several requirements that each child you’re claiming on your taxes must meet for you to claim the proper tax credit. Here are the basic requirements for each child tax credit you’re claiming. 1. The child must be below 17 years old in

the calendar year in which you are filing for the previous tax year. So if your child has their 17th birthday anytime before December 31st of the year in which you are filing the taxes, you can’t claim them for a credit. 2. Children who supply half or more of their own support also do not qualify for the tax credit. To claim the child as a tax credit, you need to be supporting the child like a dependent, and if they file their own taxes or support themselves (unusual but possible) they can’t be used to reduce your tax burden. 3. The child must have lived with you for a full six months before you can claim them for a credit. 4. Naturally, the child must be a US citizen in order to qualify for the tax credit. 5. The IRS recognizes a limited set of acceptable relationships between child and tax filer in order to qualify for the credit. These relations are: son, stepson, daughter, stepdaughter, adopted child, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them. For example, you could claim your sister’s children as tax credits as your sister qualifies and their children are their descendants. Now that you know what a child tax credit is and how you apply for them you can get your taxes done knowing what you can and can’t claim. Good luck! If you have any quick tax questions, feel free to Contact Us , and we’ll try to answer it or point you in the right direction, but we’re not tax professionals. We can only help you with general tax information provided by the IRS and other reputable resources. There’s also still time to file your taxes online through one of our preferred online tax filers and enter to win a chance at a FREE iPad!! This article was submitted by Bob Lotich. Bob runs a Christian Financial Help blog and loves helping people advance in their financial lives. (photo credit: somegeekintn ) Related Posts: Take Advantage of Free e-File For Your Tax Return Important Tax Dates To Remember I Filed My Taxes With TaxAct Online Lessons Learned From Filing My Taxes Last Night Last Minute Checklist For Filing Your Taxes Claiming Child Tax Credit – Do You Qualify? is a post from: Money Crashers

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Claiming Child Tax Credit – Do You Qualify?