The Child Tax Credit is a non-refundable tax credit that is available for certain taxpayers with qualifying children age 16 and under. As a non-refundable tax it reduces the amount of tax that a taxpayer would have to pay. However, if the tax liability is already reduced to zero, the credit will not be added to the tax refund. The Child Tax Credit has a limit of $2000 per qualifying child, which is phased out based on the amount of tax owed and the taxpayer's modified adjusted gross income.
The main provisions of the Child Tax Credit are the following:
The maximum amount of the credit is $2,000 for each qualifying child, age 16 or under claimed on the tax return. To receive any part of this credit a taxpayer must have at least $2,500 in earned income.
To be eligible for the $2,000 Child Tax Credit, each qualifying child, age 16 or under, must have a valid Social Security Number, before the due date of the tax return (including any extensions). A child with an Individual Taxpayer Identification Number (ITIN) or an Adoption Taxpayer Identification Number (ATIN) does not qualify for this portion of the Child Tax Credit.
The Child Tax Credit will phase out when the taxpayers’ adjusted gross income exceeds $400,000 for a taxpayer filing as married filing jointly and $200,000 for all other filing statuses.
A provision in the Child Tax Credit allows taxpayers to receive a non-refundable $500 credit for Other Dependents who do not otherwise qualify as a qualifying child. This $500 credit will also be available to taxpayers who have a qualifying child that is age 17, 18, or a full-time student age 19 to 24. To receive this non-refundable $500 credit, the qualifying relative or child does not need a valid social security number, but may use an ITIN or ATIN if they are a resident of the United States. See Credit for Other Dependent. The non-nonrefundable Child Tax Credit and Credit for Other Dependents is reported on Form 1040, Line 12a.
The refundable portion of the Child Tax Credit has been increased to a maximum of $1,400/per qualifying child, age 16 or under. The actual amount of the credit that a taxpayer can receive is based on 15% of taxable income above $2,500. See Schedule 8812 - Additional Child Tax Credit.
The $1,400 refundable amount will be adjusted in future years in increments of $100.
The child tax credit is a non-refundable credit, which means that it reduces the amount of tax that you have to pay. If tax liability is already reduced to zero, the credit will not be added to the tax refund. The Child Tax Credit has a limit of $1000 per qualifying child, which is phased out based on the amount of tax owed and the modified adjusted gross income.
NOTE: This is a guide on how the Child Tax Credit is calculated in the TaxSlayer Pro program. This is not intended as tax advice.