What Everyone Should Know About Child Tax Credit
If you have a child then you may be able to claim Child Tax Credit.
Child Tax Credit reduces the amount of tax which you have to pay and our simple guide looks at everything you need to know about Child Tax Credit.
What is Child Tax Credit?
Tax credits reduce the amount of tax for which you are liable. Whilst tax deductions reduce the amount of your income that is subject to tax, tax credits directly reduce your tax liability.
The Child Tax Credit is a non-refundable tax credit for people who have a ‘qualifying child’ (see below).
What counts as a ‘qualifying child’?
In order to claim Child Tax Credit, you must have a ‘qualifying child’. A ‘qualifying child’ can include a child, foster child, descendant, stepchild, sibling, step-sibling or a descendant of any of these.
Additionally, in order to be a ‘qualifying child’ all the following must apply:
- The child must be under the age of 17 at the end of the current tax year
- The child must have lived with you for over half of the current tax year
- The child is a US citizen, US national or resident of the US
- The child provided less than half of their own support in the current tax year
A child is considered to have lived with you if the child was born or died in the current tax year and lived with you for the entire time he or she was alive. If the child was away temporarily – at school, in medical care, in a juvenile detention facility or was serving with the military – then this counts as time living with you.
Limits to the amount of child tax credit you can receive
Child Tax Credit is limited to $1,000 per qualifying child.
In order to claim Child Tax Credit, you must have tax liability on line 46 of Form 1040, line 28 of Form 1040A, or line 43 of Form 1040NR. The amount of Child Tax Credit cannot be more than your tax liability. So, if the amount of credit is more than the tax you owe, you must reduce the amount of Child Tax Credit to no more than your tax liability.
If your modified adjusted gross income exceeds $110,000 for married filing jointly, $75,000 for single, head of household, or qualifying widow(er), or $55,000 for married filing separately, the amount of Child Tax Credit you can claim is reduced.
My daughter was born on 21 October 2011. Does this mean I can’t claim Child Tax Credit this year because the child hasn’t lived with me for half of the current tax year?
Nerina – thanks for your question.
You can claim Child Tax Credit. A child is considered to have lived with you if she was born in the current tax year and lived with you the entire time she was alive.