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You can claim a child tax credit for a qualifying dependent child under the age of 17. You can claim one $1,000 child tax credit for each child, with no limit on the number of qualifying children. However, the Internal Revenue Service does impose income limits. If your modified adjusted gross income exceeds the limits, the amount of the credit will be reduced or eliminated.
CTC Income Limits
Eligibility to claim child tax credits is subject to Internal Revenue Service income restrictions. The income limit that applies to you depends on your tax filing status. Once your income reaches the limit, the amount of the credit you may claim starts to phase out. For married couples filing a joint return, your modified adjusted gross income limit is $110,000. A married person filing a separate return has a limit of $55,000. The limit is $75,000 if you file as single, head of household or as a qualifying widow or widower.
Modified Adjusted Gross Income
For purposes of the child tax credit, your modified AGI equals your adjusted gross income as it appears on your tax return plus some additional items. To figure modified AGI, add any foreign earned income and any income earned as a resident of American Samoa or Puerto Rico to your AGI.
The entire child tax credit does not go away all at once when your modified AGI reaches the limit. Instead, the amount you get is reduced by 5 percent of the income that exceeds the limit; if your income is high enough, eventually the amount of the credit reaches zero. Suppose you have two qualifying children and are married and file a joint return. With no reduction, the credit for two children is $2,000. If your modified AGI is $140,000, your income is $30,000 over the limit. Your credit will be reduced by 5 percent of $30,000, or $1,500. You would therefore get a credit of $500.
Additional Child Tax Credit
In some cases a taxpayer may meet the IRS income limits but is unable to claim all of an available child tax credit. This can happen when your tax liability is less than the amount of the credit, because the CTC is not refundable. You only receive the lesser of your tax liability or the tax credit amount. However, you then become eligible to claim the additional child tax credit, which in most cases gives you the portion of the child tax credit you were unable to claim. Unlike the CTC, the ACTC is refundable, so you would receive a refund for the difference.