A:

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.

Inevitably, there will be cases where more than one taxpayer is eligible to claim the same child. If you happen to be one of these individuals, and you are a parent of the child and the other person is not, then the tax credit is claimed on your return. In other cases, refer to the instructions for Form 1040, lines 53 and 6c, or Form 1040A, lines 33 and 6c for guidance on determining which of the two taxpayers is eligible to claim the tax credit.

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.

Detailed information on the child-tax credit, including income limits, is available in IRS Publication 972.

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

RELATED FAQS
  1. What is the difference between a write-off and a deduction?

    Understand the differences between a tax write-off and a tax deduction. Learn how each one works to reduce income taxes and ... Read Answer >>
  2. How much does a dependent reduce your taxes?

    Learn the qualifications for claiming a dependent on your income taxes and the amount by which a dependent reduces your tax ... Read Answer >>
Related Articles
  1. Taxes

    How To Claim A Dependent On Your Tax Return

    If you are a caregiver, get to know the rules for claiming a dependent before filing your taxes.
  2. Taxes

    New Baby, New Tax Break

    Delivering a new baby also delivers a $1,000 child tax credit - and that's just the start!
  3. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  4. Taxes

    How To Get The Most Money Back On Your Tax Return

    Many people pay more taxes than they have to simply because they don’t know better. Here are a few suggestions for getting the most out of your tax return.
  5. Personal Finance

    Teaching Your Child To Be Financially Savvy

    If you start today, you can set your kids up for a lifetime of smart money management.
  6. Taxes

    5 Ways To Save On Child Care Costs

    Child care costs can be a shock to new and expecting parents, but are some programs in place to help with the first few years.
  7. Personal Finance

    Credit Cards For Kids

    Giving your child a credit card can be an important lesson in money management.
  8. Taxes

    Taxing Times For Divorced Parents

    Find out how to deal with the tax issues that arise for divorced parents with dependent children.
  9. Personal Finance

    How An Allowance Helps Kids Get Money-Smart

    Discover which of these three reward techniques teaches the best lessons about money.
  10. Taxes

    5 Tax Credits You Shouldn't Miss

    If you're not taking advantage of these deductions, you could be missing out on tax savings.
RELATED TERMS
  1. Dependent

    An individual whom a taxpayer can claim for credits and/or exemptions. ...
  2. Adoption Credit

    A federal tax credit that may be claimed by federal taxpayers ...
  3. Child And Dependent Care Credit

    A non-refundable tax credit for unreimbursed childcare expenses ...
  4. Additional Personal Allowance

    In the United Kingdom, an extra deduction as set forth by HM ...
  5. Special Needs Child

    Children who have been determined to require special attention ...
  6. Tax Credit

    An amount of money that a taxpayer is able to subtract from the ...
Hot Definitions
  1. Universal Health Care Coverage

    An organized healthcare system that provides healthcare benefits to all persons in a specified region. Many countries, such ...
  2. Davos World Economic Forum

    The annual meeting of the World Economic Forum hosted at Davos—a small ski town in Switzerland—in January each year is among ...
  3. Smart Home

    A convenient home setup where appliances and devices can be automatically controlled remotely from anywhere in the world ...
  4. Efficient Frontier

    A set of optimal portfolios that offers the highest expected return for a defined level of risk or the lowest risk for a ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the ...
Trading Center