How Much Do You Receive for a Child on Your Income Taxes?
- The Child Tax Credit is of primary interest to most parents because it provides a direct tax reduction (up to $1,000 in 2010) for each qualifying child. To qualify, a child must be under age 18 and not supply more than half his own support. You must claim the child as a dependent, he must live with you for more than half the year, and he must be a U.S. citizen or resident alien.
You cannot receive credit for a child who is not legally related to you nor can you claim more credit than the tax you owe. If your modified gross adjusted income exceeds the Internal Revenue Service (IRS) limits ($110,000 for married taxpayers filing jointly in 2010), the credit will be reduced.
IRS Publication 972 provides step-by-step instructions for calculating your credit, along with additional information on benefits and restrictions (see Resources). - The Additional Child Tax Credit kicks in if you're original Child Tax Credit is more than what you owe in taxes, or if you don't owe anything at all. The Child Tax Credit is not refundable, but if you complete Form 8812 for the additional credit you may be able to receive money back from the government. The additional credit is equal to the amount of Child Tax Credit you did not use, or 15 percent of your family's income, whichever is less.
You must make at least $3,000 in the year you claim the Additional Child Credit or qualify for special treatment under the IRS rules for families with more than three children. - No matter your income status, you may claim your children as dependents on your tax return. Dependents decrease your overall tax burden. To qualify as a dependent, your child must be under 19 years of age (24 if she is a full-time student), live with you most of the year, and provide no more than half her own support. She can be your natural child, adopted child or stepchild. No one else can claim her as a dependent.
Note that other relatives such as nieces or grandchildren may qualify as dependent children if they meet the IRS guidelines for dependents. - If you are a low income worker with one or more dependent children, you may qualify for a refundable Earned Income Tax Credit (EITC). The amount of the credit varies depending on your income, how you file and the number of dependent children. In 2009, married persons filing jointly could receive up to $3,043 if they had one child and made less than $46,463 during the year. IRS Publication 596 explains this credit and has a form to help you determine what your benefit will be.
- If you have children under 13 who are in daycare while you work, you can claim between 20 and 30 percent of childcare expenses as a credit, up to $3,000 for one child.
