If you’re in charge of the finances for your household, then you know every dollar counts. And when your family includes children or if you are responsible for taking care of elderly parents or relatives, then being as financially efficient as possible takes on even more importance.
To assist you in this mission, the government has several tax credits that you may qualify for. The most common of these is the Child Tax Credit, which is available to most everyone in the middle and lower income brackets who are raising families.
The Child Tax Credit was created to offset the multitude of expenses that come with raising children. Depending on your income level and how you file, the tax credit can be worth as much as $1,000 per child. But you must meet several criteria:
Check Your Eligibility
You can enjoy the full value of the Child Tax Credit if your adjusted gross income is not greater than $55,000 and you file as Married Filing Separately. For those filing as Single or as Heads-of-Household, the income level rises to $75,000. The level is $110,000 when filing Married Filing Jointly.
When you exceed each of these income levels, the value of the Child Tax Credit begins to decrease.
Additionally, each child you claim a tax credit for must meet certain criteria as well.
- They must be 16 or younger on December 31 of the year you are filing for.
- They must be a U.S. citizen, U.S. national or a resident alien.
- The child must have lived with you for at least half of the year, which is defined as 183 nights or more. Special rules apply if you are divorced.
- Each child must be related to you as a son, daughter, brother, sister, stepbrother, stepsister, stepson, stepdaughter, niece, nephew or a grandchild. Legally adopted children are also included.
In addition, each child must be claimed as a dependent on your tax return. However, it is important to note that to be able to claim them as dependents on your tax return, each child must have a Social Security number. The good news is that you can get a Social Security card for your child when you apply for their birth certificate. Otherwise, you’ll need to file a Form SS-5.
Only one taxpayer can claim a child as a dependent and thus enjoy the benefits of the Child Tax Credit. If the child is claimed on more than one return, this will raise a red flag to the IRS who will then need to make a determination as to which return can get the credit, based on a series of rules.