You may be able to reduce the amount of taxes you owe by up to $4,000, by claiming the child tax credit of up to $1,000 for each qualifying child. For the purposes of the child-tax credit, a qualifying child is defined as follows:
- Your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of them (for example, your grandchild),
- Who was under age 17 at the end of 2006,
- Who did not provide over half of his or her own support for 2006,
- Who lived with you for more than half of 2006 and
- Who was a U.S. citizen, a U.S. national, or a resident of the United States.
Some general tips for claiming the child-tax credit include the following:
- It cannot be claimed on Form 1040EZ. It can be claimed on 1040 and 1040A.
- It is in addition to the credit for child and dependent care expenses, and the earned income credit.
- The amount of credit for which you are eligible can be determined by using the formula provided in IRS Form 8812.
To read more frequently asked tax questions, see How do I get credit for my retirement plan contributions?, Common Tax Questions Answered and Which is better for tax deductions, itemization or a standard deduction?
Question answered by Denise Appleby, CISP, CRC, CRPS, CRSP, APA