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Child Tax Credit


The Child Tax Credit is a credit that may reduce the tax liability of a qualifying individual.  However, unlike the Earned Income Tax Credit, the Child Tax Credit does not produce a refund if the credit should exceed the amount of taxes due.  A taxpayer with a qualifying child may take a credit of up to $1,000.00 on his 2004 return.

Rules and Requirements

Caution:

For years post-2004, the tax law has changed to incorporate a uniform definition of a qualifying child.  AGI and MAGI amounts change each year, so consult Publication 17 for the applicable year for further guidance.

  1. Taxpayer must have a qualifying child; and

  2. Taxpayer's modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status:

    • Married Filing Jointly - $110,000
    • Married Filing Separately - $55,000
    • All others- $75,000
Qualifying Child:
    1. Is under the age of 17 at the end of the tax year

    2. Is a citizen or resident of the United States

    3. Claimed as taxpayer's dependent

    4. Is the taxpayer's:
    • Son or daughter
    • Stepson or Stepdaughter
    • Adopted child
    • Grandchild or
    • Eligible foster child
      • Adopted child – adopted child includes a child placed with taxpayer for adoption by an authorized placement agency, even if the adoption is not final. An authorized placement agency includes any person authorized by state law to place children for legal adoption.

      • Grandchild – any descendant of taxpayer’s son, daughter, or adopted child. A grandchild includes taxpayer’s great-grandchild, great-great-grandchild, etc.

      • Eligible foster child:

        1. Child must have lived with the taxpayer as a member of the taxpayer’s household for the whole year,
        2. Taxpayer must have cared for that child as her own, and
        3. Child is taxpayer’s brother, sister, stepbrother, or stepsister; a descendant (including a child or adopted child) of taxpayer’s brother, sister, stepbrother, or stepsister; or a child” placed with taxpayer by an authorized placement agency. This requirement was not included until 2000.

Resources


Internal Revenue Code

IRC §24Child Tax Credit


IRS Publications and Forms

IRS Publication 972Child Tax Credit