2007 Child Tax Credit

Written by dad - 4 Comments

I’ve written in the past about the Child Tax Credit, so I though I’d go ahead and update the information for this year’s taxes based on current IRS guidance.

In short, the Child Tax Credit the federal income tax that you owe by up to $1,000 for each qualifying child under the age of 17. In other words, it’s not a deduction (which reduces your taxable income and thus reduces your taxes fractionally). Rather, it’s a credit that gets taken straight off the top of your tax bill.

According to the IRS, a qualifying child is a child who:

1. Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your grandchild, niece, or nephew),

2. Was under age 17 at the end of 2007,

3. Did not provide over half of his or her own support for 2007,

4. Lived with you for more than half of 2007 (see Exceptions to time lived with you below), and

5. Was a U.S. citizen, a U.S. national, or a U.S. resident alien.

Furthermore:

A child is considered to have lived with you for all of 2007 if the child was born or died in 2007 and your home was this child’s home for the entire time he or she was alive. Temporary absences for special circumstances, such as for school, vacation, medical care, military service, or detention in a juvenile facility, count as time lived with you.

The maximum credit that you can claim is $1,000 per qualifying child. This is potentially, a “refundable” credit, so if your credit exceeds you tax liability, you need to fill our IRS Form 8812 to see if you qualify to claim more than you owe. Also, this credit is subject to income limits based on your modified adjusted gross income (MAGI), with the following thresholds:

Married filing jointly: $110,000
Single, head of household, or qualifying widow(er): $75,000
Married filing separately: $55,000

So if your MAGI is above these limits, the credit is phased out. Unfortunately (or perhaps I should say fortunately), we’re now beyond the phase out range, and thus can’t take advantage of this.

Published on February 14th, 2008 - 4 Comments
Filed under: Money
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Comments (scroll down to add your own):

  1. Hmmm…I’m sure by “the child tax credit is not refundable,” you actually mean “the child tax credit is refundable.” If your tax liability is $400, and you are eligible for a $2000 child tax credit, the government will write you a check for $1600.

    Comment by Peachy — Feb 24th 2008 @ 4:49 pm
  2. No, you’re misinformed. A credit can’t reduce your liability below zero (see line 57 on the 1040).

    Comment by JD — Apr 15th 2008 @ 3:06 am
  3. Please look carefully at line 68 on the 1040. You will notice the line reads “Additional Child Tax Credit.” Now, in the example I used previously, Line 57 (“Child Tax Credit”) would be $400, but line 68 (“Additional Child Tax Credit”) would read $1600. Thus, you would get $1600 even though you owed only $400. This is one of the only refundable tax credits available. (yeah! for kids) A little research on your part would confirm this.

    Comment by Peachy — Apr 16th 2008 @ 11:40 pm
  4. Peachy: You are correct that it’s *potentially* refundable, but it’s not as simple as you’re making it out to be. You have to fill out IRS Form 8812, “Additional Child Tax Credit,” to see if you qualify to claim an additional credit. It’s not automatic. I’ve updated the article to reflect this.

    Comment by dad — Apr 17th 2008 @ 7:04 am

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