The additional child tax credit has expanded the income limits

By: Robert A. Johnson

In the last few years, there have been many families with children who received some important tax relief because of an increase of the Child Tax Credit. This is really a Reduction in the taxes that you pay and not simply a Deduction from your taxable income. For the 2007 tax return, the minimum earned income amount that is used to figure the additional child tax credit has been raised to $11,750.

Child Tax Credit

The Working Families Tax Relief Act was passed by Congress in 2004. It kept the Child Tax Credit at $1,000 for each qualifying child through the year 2010. You must stay within the income thresholds of your filing status. You must use Tax Form 8812, the Additional Child Tax Credit, in order to figure out your additional credit.

Claiming the Child Tax Credit

In order to claim this credit, you must use the 1040 or 1040A tax forms ONLY. This credit is limited if your MAGI is above a specific amount. The amount will vary depending upon your filing status.

• Married filing separately - $55,000

• Married filing jointly - $110,000

• All others - $75,000

Additionally, the Child Tax Credit is usually limited by the amount of income tax that you owe as well as owing any alternative minimum tax.

If the amount on your 2007 tax form for your Child Tax Credit is more that the specified amount of income tax that you owe, you may be eligible to claim some if not all of the difference as an “Additional” Child Tax Credit. This may give you a refund even if you don’t owe any tax. On your 2007 tax form, the total amount of both the Child Tax Credit as well as any Additional Child Tax Credit is not able to exceed the maximum of $1,000 for each child that qualifies.

Claiming the additional child tax credit

In order to claim this credit, follow the steps below:

1. Make sure that you have figured the amount of your child tax credit, if any.

2. If the answer was “Yes” on lines 4 or 5 on the Child Tax Credit Worksheet in Form 1040, 1040A or 1040NR instructions use form 8812 to see if you qualify for the additional child tax credit.

3. If you have put an additional child tax credit on line 13 of Tax form 8812, then carry that figure to Form 1040 – line 68; 1040A – line 41; or Form 1040NR – line 62.