For more information about tax credits and deductions, contact Elizabeth A. Gardner, CPA, Tax Manager at 315.701.6365 or email@example.com. Elizabeth practices in the areas of individual, partnership and corporate tax return preparation and tax planning for individuals and businesses.
The Child Tax Credit is a tax credit that may save taxpayers up to $1,000 for each eligible qualifying child. Taxpayers should make sure they qualify before they claim it. Here are four facts on the Child Tax Credit:
1. Qualifications – For the Child Tax Credit, a qualifying child must pass several tests:
- Age – The child must have been under age 17 on Dec. 31, 2016.
- Relationship – The child must be the taxpayer’s son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half-brother or half-sister. The child may be a descendant of any of these individuals. A qualifying child could also include grandchildren, nieces or nephews. Taxpayers would always treat an adopted child as their own child. An adopted child includes a child lawfully placed with them for legal adoption.
- Support – The child must have not provided more than half of their own support for the year.
- Dependent – The child must be a dependent that a taxpayer claims on their federal tax return.
- Joint return – The child cannot file a joint return for the year, unless the only reason they are filing is to claim a refund.
- Citizenship – The child must be a U.S. citizen, a U.S. national or a U.S. resident alien.
- Residence – In most cases, the child must have lived with the taxpayer for more than half of 2016.
2. Limitations – The Child Tax Credit is subject to income limitations. The limits may reduce or eliminate a taxpayer’s credit depending on their filing status and income.
3. Additional Child Tax Credit – If a taxpayer qualifies and gets less than the full Child Tax Credit, they could receive a refund, even if they owe no tax, with the Additional Child Tax Credit.
Because of a new tax-law change, the IRS cannot issue refunds before Feb.15 for tax returns that claim the Earned Income Tax Credit (EITC) or the ACTC. This applies to the entire refund, even the portion not associated with these credits. The IRS will begin to release EITC/ACTC refunds starting Feb. 15. However, the IRS expects these refunds to be available in bank accounts or debit cards at the earliest, during the week of Feb. 27. This will happen as long as there are no processing issues with the tax return and the taxpayer chose direct deposit.
4. Schedule 8812 – If a taxpayer qualifies to claim the Child Tax Credit, they may need to complete and attach Schedule 8812, Child Tax Credit, with their tax return.
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