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Taxpayers May Benefit from the Child Tax Credit

You may be able to claim the Child Tax Credit, which allows you to reduce the federal income tax you owe by up to $1,000 for each qualifying child younger than 17.

Qualifying Rules

A child qualifies if he or she meets these criteria:
  • The child is a citizen, resident or national of the U.S. and is younger than 17.
  • The child is your son, daughter, adopted child, stepchild, eligible foster child, sibling, stepsibling or a descendant of any of these individuals.
  • The child lives with you for more than half of the tax year or is treated as your qualifying child under the special rule for parents who are divorced, separated or living apart.
  • The child is not treated as the qualifying child of another taxpayer under the special rule for 2 or more taxpayers claiming a qualifying child or the special rule for parents who are divorced, separated or living apart.

Credit Limit

The credit is limited if your modified adjusted gross income is more than a certain amount. The amount at which the credit is reduced varies depending on your filing status:
  • Married Filing Jointly - $110,000
  • Married Filing Separately - $55,000
  • All others - $75,000

In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.

Additional Child Tax Credit

If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim some or all of the difference as an "additional" Child Tax Credit. The additional Child Tax Credit may give you a refund even if you do not owe any tax. For 2007, the total amount of the Child Tax Credit and any additional Child Tax Credit cannot exceed the maximum of $1,000 for each qualifying child.

Individuals entitled to receive the Child Tax Credit and additional Child Tax Credit may also be eligible to receive the Child and Dependent Care Credit and the Earned Income Credit.

Claim the Child Tax Credit on Form 1040 or 1040A. Details on how to compute the credit can be found in the forms' instructions and in Publication 972.

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