The Child Tax Credit
With the child tax credit, you may be able to reduce the federal income tax you owe by up to $2,000 (beginning tax year 2018) for each qualifying child under the age of 17. If have children and are not married to the co-parent, your tax obligations and rights may be affected by any child support orders you have.
Below is a basic overview of the federal tax credit for dependent children.
Who Is a Qualifying Child?
For purposes of claiming the child tax credit, a qualifying child is a person who meets the following conditions:
- Is claimed as your dependent;
- Was under age 17 at the end of the tax year;
- Is your son, daughter, adopted child, grandchild, stepchild or eligible foster child, your sibling, stepsibling or their descendant; and
- Is a U.S. citizen or resident alien.
Are There Limits to the Credit?
Yes. The tax credit is limited if your modified adjusted gross income is above a certain amount. Your filing status determines the number at which this phase-out begins. As of 2017, the limits were as follows:
- Married Filing Jointly - $110,000
- Married Filing Separately - $55,000
- All others - $75,000
In addition, the tax credit is limited by the amount of the income tax you owe as well as any alternative minimum tax you owe. For example, if the amount of the credit you can claim is $1,000, but the amount of your income tax is $500, the credit ordinarily will be limited to $500.
Are There Exceptions to the Limits?
Yes, there are two exceptions to the tax credit limitations. If the amount of your child tax credit is greater than the amount of income tax you owe, you may be able to claim some or all of the difference as an "additional" credit under two circumstances:
- You may claim up to 15 percent of the amount by which your earned income exceeds $10,750 (for members of the Armed Forces who served in a combat zone, nontaxable combat pay counts as earned income when figuring this credit limit); or
- If you have three or more qualifying children, you may claim up to the amount of Social Security taxes you paid during the year, minus any Earned Income Credit you receive.
If you qualify under both these exceptions, you receive the greater of the two amounts, up to the difference between your tax liability and your regular child tax credit. Use Form 8812 to figure the additional credit. The total amount of the child tax credit and any additional credit can't exceed a maximum amount for each qualifying child.
Individuals entitled to receive this credit and any additional child tax credit may also be eligible to receive the Child and Dependent Care Credit and the Earned Income Tax Credit.
How Does Child Support Affect the Child Tax Credit?
If a child’s parents’ are not married, only the parent using the dependency tax exemption can claim the credit. The parent with primary custody (usually the parent who receives child support) may use Form 8332 to release the exemption to the other parent. In that circumstance, the parent paying child support would qualify for the dependency exemption and therefore the child tax credit
How Do I Claim the Child Tax Credit?
You may claim this tax credit on Form 1040 or 1040A. Details on how to compute the credit can be found in the forms' instructions and in Publication 972.
Get Professional Legal Help Figuring Out the Child Tax Credit
Sorting out your as a single parent can be time-consuming and complicated. For assistance completing your income tax returns, you may consider contacting a tax professional. If you need legal advice about child support and tax rights, you may want to consider contacting an experienced child support attorney near you.