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Michael Green Tax & Financial: Save Money With The Child Tax Credit

BY: MICHAEL GREEN

Raising children can be expensive. However, when Congress passed the Fiscal Cliff Agreement in January 2013, the Child Tax Credit was put in place for five years, locking it in from 2012 to 2016. As you file your tax return, it’s worth learning more about the Child Tax Credit, which has the potential of lowering what you owe the IRS.       

The Child Tax Credit may be worth as much as $1,000 per qualifying child depending upon your income. There are seven tests that must be met to claim this tax credit. According to the IRS, here’s what you need to know about this tax credit.


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1. Age test.  The child must have been under age 17 at the end of 2012.

2. Relationship test.  The child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, or stepsister. A child may also be a descendant of any of these individuals, including your grandchild, niece or nephew. You would always treat an adopted child as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

3. Support test.  The child must not have provided more than half of their own support for the year.

4. Dependent test.  You must claim the child as a dependent on your federal tax return.

5. Joint return test.  The child cannot file a joint return for the year, unless the only reason they are filing is to claim a refund.

6. Citizenship test.  The child must be a U.S. citizen, U.S. national or U.S. resident alien.

7. Residence test.  In most cases, the child must have lived with you for more than half of 2012.

 

  • Limitations.  The Child Tax Credit is subject to income limitations, and may be reduced or eliminated depending on your filing status and income.
  • Additional Child Tax Credit.  If you qualify and get less than the full Child Tax Credit, you could receive a refund even if you owe no tax with the refundable Additional Child Tax Credit.
  • Schedule 8812.  If you qualify to claim the Child Tax Credit make sure to check whether you must complete and attach the new Schedule 8812, Child Tax Credit, with your return. If you qualify to claim the Additional Child Tax Credit, you must complete and attach Schedule 8812.

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IRS Publication 972, Child Tax Credit, can provide you with more details. View it online at IRS.gov or request it by calling 800-TAX-FORM (800-829-3676).

Michael Green of Michael L. Green Tax and Financial is an Enrolled Agent and Certified Financial Planner in Valencia.Michael Green can be reached by calling (661) 257-4111.