The child tax credit can reduce a taxpayer’s owed tax by up to $1,000 per child. This credit can be very valuable since it does not simply reduce taxable income but deducts straight from what you owe.
Determining whether someone is qualified and how much credit to claim can be confusing. Many taxpayers choose to use a child tax credit calculator for their returns in 2013.
The two main tests to determine if a person is qualified to take the credit are the dependent and citizen tests. The child must be blood related or adopted child that lives in the home for the entire year. They also must be a U.S. citizen or resident and their social security number used on the return to claim the credit.
Other terms include; child must be under age 17 at the end of the year, they must be a dependent who has been supported all year, and the income must be within allowed range.
The income used is a modified adjust gross income (AGI) and the amounts at which the credit phases out differ depending on the taxpayer’s filing status. This mathematical part is another reason people choose to use a child tax credit calculator.
Another part of the credit is the additional child tax credit. This credit is also taken from the amount of tax owed by a taxpayer. The purpose of this related credit is to provide additional financial relief for those whose owed tax amount is low enough that it is reduced past zero by the child tax credit.