Although the Child Tax Credit is $1,000 per child, this tax credit has some limitations These limitations are as follows;
1.The Child Tax Credit is limited if your modified adjusted gross income is above a certain amount.
The amount at which this phase-out begins varies depending on your filing status:
• Married Filing Jointly $110,000
• Married Filing Separately $55,000
• All others $75,000
2.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.
Thus, for example, let us assume you have 2 qualifying children, therefore you are entitled to claim $2,000 ( 2 x $1,000) in child care credit. Let us assume that you meet the adjusted gross income test (Point 1 above) but your tax liability is only $2,500 and you have withheld only $1,500. You are only entitled to claim $1,000 in Child Tax Credit (the lesser of $2,000 or $2,500 -$1,500). In other words, if you did not have a tax liability you would not be entitled to any child tax credit.