5 Things to Know About the Child Tax Credit

The IRS recently posted an article about the “5 Things to Know About the Child Tax Credit.”
Just in case you missed it, we’ve summarized the highlights here for you.

The Child Tax Credit is a tax credit that may save taxpayers up to $1,000 for each eligible, qualifying child.

Before claiming this tax credit you should verify the following if your child meets the qualifications. 

I. Qualifications:

1. Age — Your child must have been under age 17 years old on December 31, 2016.
2. Relationship — Your child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half-brother or half-sister. The child may be a descendant of any of these individuals. A qualifying child could also include grandchildren, nieces or nephews. Taxpayers would always treat an adopted child as their own child. An adopted child includes a child lawfully placed with you for legal adoption.
3. Support — The child must have not provided more than half of their own support for the year.  If the child provided more than 50% of their own support you do not qualify for this tax credit.
4. Dependent — The child must be a dependent that you can claim on your federal tax return.
5. Joint return — The child cannot file a joint return for the year except with the following exception: they are filing to claim a refund.
6. Citizenship — The child must be a US citizen, a US national or a US resident alien.
7. Residence — In most cases, the child must have lived with you for more than half of 2016.
If you are unsure of any of these the IRS provides an interactive Tax Assistant Tool to help you — Is My Child a Qualifying Child for the Child Tax Credit?  Also your Tax Preparer or Accountant may be able to clarify specific situations should you require additional help.

II. Limitations: 

The Child Tax Credit is subject to income limitations and therefore, these limits may reduce or eliminateyour (the taxpayer’s) credit depending on filing status and income.  Not sure of the limits?  Contact your tax professional.

III. Additional Child Tax Credit:

If you qualify and gets less than the full Child Tax Credit, you could receive a refund, even if you owe no tax, with the Additional Child Tax Credit. As long as there are no processing issues with the tax return and the taxpayer chose direct deposit.  The IRS plans to issue refunds in late February 2017. 

IV. Schedule 8812:

If you, the taxpayer, qualify to claim the Child Tax Credit, you need to check and see if a Schedule 8812, Child Tax Credit - should be filed with your tax return.   Forms are available online at IRS.gov or your tax preparer can assist you.

V. IRS E-file:

The IRS suggests that the easiest way to claim the Child Tax Credit is with IRS E-file. Taxpayers can also use IRS Free File to prepare and e-file their taxes for free. Additional information be found at IRS.gov/filing

Note: All taxpayers should keep a copy of their tax return. The IRS reports that beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity.

Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

Do you require assistance with your business and personal taxes?  FL-Accounting and Advisers – your Boutique Accounting Company –  is here to provide you with a complimentary consultation to discuss your specific needs.  Contact our office at (561) 939-2553 for your appointment.  After-hours appointments are available as well as Accounting services in English and Spanish.

Wendy Ettorre