The IRS provides for a Child Tax Credit for tax payers with a qualifying child in a family situation where the household income is less than $110,000 a year. This reduces a taxpayers overall tax bill.
In some cases the credited amount will be more than the taxpayer's income tax amount and this portion can be refunded as a "reverse credit" by utilizing something called the additional child tax credit.
Using the child tax credit worksheet
In order to figure out first, if you quality, and second, how much it will be, the IRS provides the child tax credit worksheet. This worksheet helps you determine your credit, if any. To determine if you have a qualifying child, go to the "Qualifying Child" section of the instruction booklet attached to the worksheet.
Basically, a qualifying child is a dependent under 17 years of age who is also a relative. But check the booklet to be sure. If you have a qualifying child, go ahead and use the worksheet to determine the amount of your credit.
Instructions for the child tax credit worksheet
First you will enter the number of qualifying children and multiply that by $1000. Then you will enter various figures from your 1040 form (or similar 1040A, 1040NR etc.) to determine if your income exceeds the threshold for qualifying for the credit.
Following determination whether your income exceeds the threshold for the credit, you will enter other figures from your 1040 or similar form, on the worksheet and if you qualify for the additional child tax credit you can take that credit by filling out Schedule 8812.
These valuable tax credits put money in your pocket, as it is a "reverse credit", similar to the earned income credit, for certain working individuals and families whose income falls below a certain threshold. If your income falls below this threshold it is all the more important to carefully fill-out the worksheets so you get the refund to which you are entitled.
Try Turbo Tax to claim all of your tax credits for children. By answering simple questions the program will fill in your entries into the correct place. Your tax return will be scanned many times before you file to ensure you will not miss any valuable tax credits or tax deductions.
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