Who is eligible to claim a Child Tax Credit in 2007?
Clearly, all Taxpayers would be wishing to reduce the amount of the Federal Income Taxes that they owe in 2007. By claiming the Child Tax Credit, the taxpayer is able "to reduce the federal income tax potentially owed by up to $1,000 for each qualifying child under the age of 17."
However, with all Tax Credits available by the IRS, the Taxpayer must meet certain stringent tests in order to take advantage of the Child Care Tax Credit. These are that the Taxpayer must have a qualifying child. The IRS has defined that "a qualifying child for this credit is someone who meets the following criteria":
1. Age Test:
The Child was under age 17 at the end of 2007.
2. Relationship Test:
The Child must be your son, daughter, adopted child, stepchild or eligible foster child, brother, sister, stepbrother, stepsister, or a descendant of any of these individuals.
3. Citizenship Test:
The Child must be a U.S. citizen, U.S. national or resident of the U.S.
4. Support Test:
The qualifying child did not provide over half of his or her own support, and lived with you for more than half of 2007.
Phaseouts of the Child Care Credit
Unfortunately, the credit is limited "if your modified adjusted gross income is above a certain amount." The amount at which this phase-out begins depends on the filing status of the taxpayer:
Married Filing Jointly ---------- $110,000
Married Filing Separately------- $55,000
All others------------------------- $75,000
Furthermore, the IRS has stated "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."
However, if the amount of your Child Tax Credit is greater than the amount of income tax you owe, a taxpayer may be able to claim some or all of the difference as an “Additional” Child Tax Credit.
If is worth noting the "Additional Child Tax Credit" may provide the taxpayer with a refund even if there is no federal income tax liability!
For 2007, "the total amount of the Child Tax Credit and any Additional Child Tax Credit cannot exceed the maximum of $1,000 for each qualifying child."