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Seven Requirements to Qualify for the Child Tax Credit

Seven Requirements to Qualify for the Child Tax Credit

You must first decide if your child is eligible for the Child Tax Credit before filing a petition. Age, family relationship, sponsorship, dependent status, residency, period of residency, and family income are the seven qualifying conditions to remember.

To be eligible for this tax credit, you and/or your child may satisfy all seven conditions.

How do you know if you’re eligible?

Here’s how to figure out which of your children will be eligible for the credit:

A minimum age requirement

The kid must be under 17 years of age (that is, 16 years or younger) at the close of the tax year for which the allowance is applied to be available for it.

Requirement for familial relationships

The child must be your biological child, stepchild, or adopted child who is financially dependent on you as a result of a court order or approved agency decision. Adopted children are often treated as your own. (“Adopted child” means a child who is in your custody as a result of a legitimate adoption, even if the adoption is not finalized until the end of the tax year.) ) You can also say your sibling or step-sibling. If you meet all other criteria, you can say ancestors of all these eligible persons, such as nieces, nephews and grandchildren.

Support is needed.

To be qualified, the child must have supported himself or herself for more than half of the tax year.

Requirement that is dependent

In your own tax return, you must claim the child as a dependent. It’s important to remember that in order to claim a child as a dependent, the child must meet the following criteria:

  1. Be it an infant (whether an adoptive or foster child), a sibling, a niece or nephew, or a grandchild;
  2. Have a lifelong condition, regardless of age, or be under the age of 19 (or under the age of 24 and a full-time student for at least five months of the year).
  3. I’ve spent more than half of the year with you; and
  4. During the year, you did not have more than half of your own financial resources.

Requirement for Citizenship

The kid must be United States citizen, naturalized citizen, or permanent resident.

Residency is required.

The kid must have invested upwards of part of the tax year for which you are claiming the credit with you. There are, however, a few notable exceptions:

  1. infant that was born (or died) within the tax year is known to have spent the whole year with you.
  2. Temporary absences by you or your child due to special conditions, such as school or college, holidays, business, medical treatment, military service, or incarceration in juvenile institution, are counted as time your child lived with you.
  3. For children of divorced or separated parents, there are several exceptions to the residence requirement. See the instructions for Form 1040 for more details.

Requirement for Family Income

If your Updated Adjusted Gross Income (MAGI) crosses those limits, which are determined by your filing status, the Child Tax Credit is limited.
  1. For married couples filing separately in 2017, the compensation level is $55,000, $75,000 for singles, heads of household, and eligible widowed taxpayers, and $110,000 for married people joint filers. Your available child tax credit is limited by $50 for every $1,000 of income above the threshold.
  2. The phase-out of the credit starts in 2018 with income of $200,000 ($400,000 for married couples filing jointly).

What happens if my credit card debt exceeds my ability to pay?

The Child Tax Credit is not returnable; if it increases your tax obligation, your tax bill will be reduced to zero, and any residual credit will be deducted.  For the remaining part, you will be entitled to claim refundable Extra Child Tax Credit.
  1. The maximum amount of the Additional Child Tax Credit is $1,400 per eligible child.
  2. Fill out the worksheet on IRS Form 8812 to see whether you qualify for this refundable credit.

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