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Federal Child Tax Credit
- AN OVERVIEW -
For more information, click on the questions below:
The Child Tax Credit (CTC) is an important tax credit that families may claim on their federal tax returns. For some families who are eligible, claiming the CTC will lower the amount of taxes they owe the federal government. Other families, especially those with low (but some) earned income, may also be able to receive a “refund” from the federal government should they not owe any taxes or owe less than the full amount of the CTC.
This tax credit should not be confused with another federal tax credit, the Child and Dependent Care credit. A person by virtue of having a “qualifying” child can claim the CTC; whereas, the Child and Dependent Care credit is intended for workers who must pay expenses in order to provide care for children under the age of 13 (or care for persons who have a disability and can be claimed as a “dependent”) while they work.
To claim the Child Tax Credit, you must have at least one “qualifying” child and have income under a certain limit, depending upon your tax filing status (e.g., single, married filing jointly, etc.). The definition of “qualifying child” is similar to, but not identical with, the definition used for the Earned Income Credit, which is another very important tax credit for some families.
The CTC is “partially refundable” for some families. In order to be “refunded” the CTC for the 2008 tax year, you must have taxable earned income above $8,500 and owe less in taxes than the CTC amount you may claim. (This earned income limit was reduced from the previous year's limit, making it easier to now qualify for a partial refund).
Many families who are eligible for the Earned Income Credit (EIC) will also be eligible for the Child Tax Credit. However, income limits for the CTC are well above the limits for the EIC, meaning that more families in the United States are eligible for the CTC than the EIC. Families who are eligible for the CTC may want to explore whether they can also claim the EIC, especially if they have at least one adult worker and have low-to-moderate income. What Amount of CTC may I Claim?
At present, the Child Tax Credit (CTC) is worth $1000 per “qualifying” child. It is important to note that when the credit amount is more than what is owed in taxes, the CTC is partially refundable, provided you qualify. The actual amount of CTC you may be able to claim (and in some cases refunded) is best determined in the context of figuring out your overall tax return.
To claim (apply for) the federal CTC, a worker must file a tax return with the Internal Revenue Service, usually by April 15th. A tax filer will need to complete either Form 1040A or Form 1040 and submit it to the IRS. Some persons will also need to complete Form 8812 (“Additional Child Tax Credit”) in order to receive a partial refund of the CTC. There are multiple ways to obtain these forms, including over the Internet. Assistance in filing a tax return may be available for free in some locations in your area.
Click on the above for answers to frequently asked questions about the CTC.
Click on the above for a list of useful web sites that provide additional information about the CTC.
This section last updated on 01/25/09
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