Child and “Kiddie” Tax Credit, Qualification and Income Thresholds

19 comments

[2015-2016 Tax Year Update] The IRS announced the child tax credit will remain at $1,000 per child in 2015. Families must have at least $3,000 in earned income to claim any portion of the credit and can receive a refund worth 15 percent of earnings above $3,000, up to $1,000 per child. See the updated table below for qualification and income threshold details.

For 2015, the threshold for the other child related tax credit, known as the kiddie tax – meaning the amount of unearned net income that a child can take home without paying any federal income tax – is $1,050. See more from Turbo Tax where they outline 7 Requirements for the Child Tax Credit

Child Tax Credit Qualification rules

The Child Tax Credit (CTC) covers children under 17 years-old and is available to tax paying parents or legal guardians on the child. This credit is the largest tax provision benefiting families with children. Full CTC eligibility is subject to income limits. After these income levels the credit is reduced by 5% of adjusted gross income. Because it is a credit, and not a tax deduction, taxpayers receive it is a refund if no taxes are owed. The IRS has published some other additional information around claiming and qualifying for  the credit:

Additional Qualification – A qualifying child for this credit is someone who meets the qualifying criteria of six tests: age, relationship, support, dependent, citizenship, and residence.

  1. Age Test – To qualify, a child must have been under age of 17 (i.e. 16 years old or younger) at the end of the year in which the credit is being claimed for.
  2. Relationship Test – To claim a child for purposes of the Child Tax Credit, they must either be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew. An adopted child is always treated as your own child.
  3. Support Test – In order to claim a child for this credit, the child must not have provided more than half of their financial support in the given financial year the credit is being claimed for.
  4. Dependent Test – You must claim the child as a dependent on your federal tax return. No one else can claim the child.
  5. Citizenship Test – To meet the citizenship test, the child must be a U.S. citizen, U.S. national, or U.S. resident alien.
  6. Residence Test – The child must have lived with you for more than half of the year you are the claiming the credit for.
  7. Income Limitations – The credit is limited if your modified adjusted gross income is above a certain amount. Limits are $110,000 on a joint return, $75,000 for an unmarried individual and $55,000 for a married individual filing a separate return. The credit is reduced/phased-out by $50 for each $1,000 of income above the income threshold amounts.  The phaseout ranges are set by statute and so are not adjusted for inflation.
  8. In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.
  9. Additional Child tax Credit – If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit (ACTC). The ACTC is equal to the lesser of the unallowed Child Tax Credit, or 15% of your earned income that is more than $3,000.

The Child tax credit can be claimed in addition to the existing credits for Child Dependent Care expenses.

[2014 Update] This IRS has confirmed that the 2014 Child tax credit will remain at $1,000 through 2014.

[2013 Update] For 2013, the Child Tax Credit was set to drop to $500. However with the fiscal cliff deal the child tax credit maximum for each eligible under-age-17 child was kept at $1,000 for 2013 and also extended through 2017. The deal also contains provisions to make the 2013 Child Tax Credit available to more working families that previously could not benefit from it by raising income qualification thresholds, which are not indexed to inflation and instead set by statute.

For 2012 the child tax credit started phasing out (reducing) for those above a specified modified adjusted gross income (MAGI). For married taxpayers filing a joint return, the phase-out begins at $110,000. For married taxpayers filing a separate return, it begins at $55,000. For all other taxpayers, the phase-out begins at $75,000. The credit is reduced/phased-out by $50 for each $1,000 of income above the income threshold amounts.

In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax (AMT) you owe. Other qualification details for the credit, per the update below, are set to remain the same.

As part of bush-era tax cuts extension legislation (Tax Relief, Unemployment Insurance Re-authorization, and Job Creation Act of 2010), a number of popular tax breaks were extended. This includes the valuable tax credit for dependent children that many parents have taken advantage of over the last few years. Thanks to past legislation the child tax credit was doubled to its current level of $1,000, plus making the eligibility and qualification thresholds lower so that more families can take advantage of it. The latest legislation keeps all past rules intact and funds the credit for another two years.

Leave a Reply

19 Comments on "Child and “Kiddie” Tax Credit, Qualification and Income Thresholds"


julia quinn
Friday 5:17 am

Practical blog post ! I was fascinated by the details . Does anyone know where I might get ahold of a fillable a form document to fill out ?

Gianna walker
Thursday 11:43 am

I’m a singel mom of 3, my oldest is 17. Still I’m school. I’m not understanding why I can’t claim him if he’s a student n lives with me and I support him.

missy
Sunday 8:21 pm

Hi im a 26yr old divorced woman with 2kids my oldest is in school an my youngest will be 3 in may an will be starting head start soon i make $8 an hr 40hrs a week so around 15,500 a yr i don’t get any child support. Can u give me a estimated amount of how much i will get back when i file next January2016 for this yr??

Amber
Tuesday 10:49 am

i am helping a family who has 4 kids in full time schooling. She claims the 15, 10 & 7 year old so she gets the child tax credit but was told she couldn’t claim the 18 year old even though he is a junior in high school and not working. He worked two months during the summer for minimum wage. She receives govt assistance for him but was told she couldn’t or shouldn’t claim him. We want to do what is legally right and with hopes it will hep the family. In addition does he haveto file on his own. Again, he’s living at home and a full time student. Thanks

Tracy Lynn George
Sunday 10:23 pm
I am 36 ..well 35 in December. 2014..I am a single mother. Of a single1 year old Son..he was born in February28-2014 and. My. Baby daddy went to jail for battery in the2nd degree against me while I was 8 months pregnant ..too keep roof over my son’s and is head I kept my house house cleaned and laundry done ..since I had. New baby and no paying job. I have moved into a friends house..got a job making 7:25 .hr and never get over my20 hours per weekk.I do good to get 8 hrs a week..I have foodstamps 316.00 a month and my bchoirs played our way to live at Robert…I now pay 60.00 every 2 weeks for child care. And been on the waiting list for government housing since September 2014…I’m still waiting to hear back from them…please let me know what if anything I can. Do to… Read more »
Danuelle
Thursday 9:58 pm

I have had my godson for over half of the year, am I allowed to claim him?

zoraida
Monday 6:29 pm

I made 15500 I have 5 independent I’m head of household 3 are still in school under 16 about how much will I get back on my income tax

[…] Multi-year extensions have also been approved for a number of popular tax credits that benefit lower income families. This includes the American Opportunity Education Tax Credit (AOTC) for college tuition, expanded earned income tax credit (EITC) and Child Tax Credit (CTC). […]

[…] tax topics. For example, help taxpayers see if they qualify for various tax benefits, such as the Child Tax Credit and Additional Child Tax Credit for eligible families, the American Opportunity Tax Credit for […]

[…] credit, you may be eligible for the Additional Child Tax Credit. For more information, see the this CTC article with 2012 and 2013 details based on Publication […]

[…] and ultimately a lower tax bill. Further, tax payers may also get access to tax credits like the child tax and earned income credits through their dependents. Finally, claiming someone as a dependent can […]

[…] In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax (AMT) you owe. Other qualification details for the credit can be found in this article. […]

[…] wants you to add back when determining your qualifications for tax credits like EITC, AOTC and the Child Tax Credit and whether you can make tax deductible IRA contributions. Deductions you need to add […]

Katherine
Monday 9:38 pm

I have 3 children 2 are which are still in school and the other in college we were only allowed to claim our youngest what about kids still in school and you still have to pay for their meals, clothes and schooling why did they change the law where you cant claim your 17 or 18 year old still in school.

Patricia
Thursday 3:39 pm

I have two kids in school who live with me. My daughter just turned 17 on December 4, 2011 and is in 11th grade in highschool.

My son is 18, a 12th grade highschool student. Will I be able to file tax credit for them both?

I only made $28,000 for the year……..I am head of the household

Andy
Sunday 11:36 am

If you are claiming the child tax credit or additional child tax credit the sum of the two cannot be more than $1,000 multiplied by the number of qualifying children. Also, at least one dependent must meet the requirements for the child tax credit. Make sure that each dependent you claim:

Qualifies as a dependent
Is under age 17
Is a U.S. Resident

[…] The IRS thinks so, too. It allows you to count the day camp (not overnight camps) costs toward your child care credit claim. Just make sure you hang to those receipts for when you file your […]

[…] Child Tax Credit  of $1000 per child under 17 years-old will continue to be available to parents or legal guardians on the child. […]

wpDiscuz

Previous post:

Next post:

Disclaimer: The information contained on Saving to Invest (this site) is for general information purposes only and does not constitute factual or professional financial advice. In accordance with FTC guidelines, we disclose that we may have a financial relationship with some of the merchants/companies mentioned on this website. We do our best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers. Refer to the Privacy Policy and Terms of Use for more information