Do you have a child under age 17? If so, you may be eligible to claim up to $1,ooo per child.
• Amount. The non-refundable Child Tax Credit may help cut your federal income tax by up to $1,000 for each qualifying child you claim on your tax return.
• Qualifications. There are seven qualifying tests to consider. You and/or your child must pass all seven to claim this tax credit.
1. Age test. The child was under age 17 at the end of 2013.
2. Relationship test. The child is your son, daughter, stepchild, foster child, brother, sister, stepbrother, or stepsister. A child can also be a descendant of any of these persons. For example, your grandchild, niece or nephew will meet this test. Adopted children also qualify. An adopted child includes a child lawfully placed with you for legal adoption.
3. Support test. The child did not provide more than half of his or her own support for 2013.
4. Dependent test. You claim the child as a dependent on your 2013 federal income tax return.
5. Joint return test. A married child can’t file a joint return with their spouse they are filing jointly only to claim a tax refund.
6. Citizenship test. The child must be a U.S. citizen, U.S. national or U.S. resident alien. For more see Publication 519, U.S. Tax Guide for Aliens.
7. Residence test. In most cases, the child must have lived with you for more than half of 2013.
• Limitations. Your filing status and income may reduce or eliminate the credit. The child tax credit is reduced if your modified adjusted gross income (MAGI) is above certain amounts, which are determined by your tax-filing status. The phase out threshold is $55,000 for married couples filing separately; $75,000 for single, head of household, and qualifying widow or widower filers; and $110,000 for married couples filing jointly. For each $1,000 of income above the threshold, your available child tax credit is reduced by $50.
• Additional Child Tax Credit (Schedule 8812). If you get less than the full Child Tax Credit, you may qualify for the refundable Additional Child Tax Credit. This means you could get a refund even if you owe no tax.
• Interactive Tax Assistant Tool. You can use the ITA tool at IRS.gov to see if you can claim the credit.
Issue Number: IRS Tax Tip 2014-18