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

  1. Are personal loans tax deductible?

    Interest paid on personal loans is not tax deductible. If you take out a loan to buy a car for personal use or to cover other ... Read Full Answer >>
  2. Are UTMA accounts escheatable?

    Like most financial assets held by institutions such as banks and investment firms, UTMA accounts can be escheated by state ... Read Full Answer >>
  3. Are Cafeteria plans subject to FICA, ERISA or FUTA?

    Cafeteria plans are employer-sponsored benefit plans that provide both taxable and nontaxable, or qualified, benefit options ... Read Full Answer >>
  4. Does the IRS charge interest on penalties?

    The Internal Revenue Service (IRS) charges interest on any overdue taxes owed, but it does not charge interest on penalties. ... Read Full Answer >>
  5. Are tax shelters legal in Canada?

    Most tax shelters are legal in Canada. However, there have been illegal tax shelter scams that the Canada Revenue Agency ... Read Full Answer >>
  6. Can the IRS garnish your tax refund?

    Federal law states that only state and federal agencies, such as the Internal Revenue Service (IRS), are allowed to garnish ... Read Full Answer >>
Related Articles
  1. Economics

    What China's New Policy Means for Business

    Now that China has eliminated its one-child policy, how will the new policy impact businesses?
  2. Taxes

    10 Money-Saving Year-End Tax Tips

    Getting organized well before the deadline will curb your frustration and your tax liability.
  3. Taxes

    End-of-the-Year Checklist to Save on Income Taxes

    From grouping related expenses to factoring in the alternative minimum tax, here are some things you need to keep in mind when doing tax planning.
  4. Taxes

    Before You Visit Your Tax Preparer: Do This

    The earlier you start preparing your tax records and documents, the more likely you are to have a smooth tax return experience – and all the tax benefits you're due.
  5. Taxes

    How to Pay Minimal Taxes on Retirement Assets

    Withdrawing and spending during retirement can be complicated. Here are some tips on how to manage the process in the most tax-efficient manner.
  6. Investing

    Should You Make Your Teen Pay for Their First Car?

    Teenagers need to learn financial responsibility, but they also still need help when it comes to their first car purchase.
  7. Savings

    Fund College for a Grandchild: 529 vs. HEET

    For some grandparents, a HEET is a desirable option for funding their grandchildren's college education. Here's what you need to know about this trust.
  8. Taxes

    When You Should Change Your Withholding Tax

    Paying attention to your W-4 form, and making adjustments when necessary, is an important way to make sure your tax withholdings are correct.
  9. Markets

    Hillary Clinton Promises Free College and Higher Wages

    With income inequality on the rise, Hillary Clinton is running on raising the minimum wage, raising middle class wages, and providing free or low-cost college education.
  10. Retirement

    4 Unusual Ways to Boost Social Security Benefits

    Working the system to get the highest legal Social Security benefits just got harder. Two long-time benefits strategies expired with the 2015 budget bill.
  1. Taxes

    An involuntary fee levied on corporations or individuals that ...
  2. W-2 Form

    The W-2 form reports an employee's annual wages and the amount ...
  3. Sales Tax

    A consumption tax imposed by the government on the sale of goods ...
  4. Duty Free

    Goods that international travelers can purchase without paying ...
  5. Wealth Management

    A high-level professional service that combines financial/investment ...
  6. Tax Deductible Interest

    A borrowing expense that a taxpayer can claim on a federal or ...

You May Also Like

Trading Center