Information about Claiming a Child on Tax Return

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Having kids can reduce some amount of tax one pays to the government. Such a tax is known as ‘Child Tax Credit’. It is one of the many ways of availing exemptions on tax returns. Many people are not aware of the fact that up to $1000 can be availed through child tax credit. The following paragraphs deal with information about how to avail these taxes.

To claim children for gaining tax benefits, one should fulfill some requirements. The child should be living with the claimant for at least six months and 1 day. Married couples who jointly file their income tax returns can claim the tax benefits collectively. The procedure for claiming children on taxes is not very complicated. One needs to first verify whether he/she is allowed to do so.

How to Claim Children on Taxes
One can earn relief from tax deductions to a great extent by availing child tax credit.

  • The information pertaining to number of dependents should be filled in the form 1040, 1040A or 1040NR.
  • If the given person is legally allowed to claim a child, then name and social security number of that child needs to be filled in the form.
  • One should also check the ‘IRS Publication 972’. It tells you about the criteria for qualification.

The following points are used in determining whether a child qualifies for the parent to claim him/her for tax benefit.

  • The qualifying child needs to be the son, daughter, foster child, stepchild, sister, brother, stepsister or stepbrother of the claimant.
  • The child should not be older than 17 years of age.
  • The claimant should have lived with the child for more than 6 months.

Credit Amount
The amount of child tax credit that can be availed, has consistently increased over time, starting from the year 2001. From the years 2001-2004, credit for every child was $600, while it was $700 per child between the years 2005 and 2008. In 2009, the amount was $800. As per the ‘Economic Growth and Tax Relief Reconciliation Act’, which was passed in the year 2001, the credit per child from the year 2010 is $1000.

Limits on Credits
Child tax credit can be limited by certain conditions. If the amount specified in line 46 of Form 1040, the line 43 of Form 1040NR or line 28 of Form 1040A is more than the child tax credit, one has to reduce the child tax credit being availed. There is one more condition which limits the child tax credit. As per the condition, modified adjusted gross income (AGI) should be less than the amounts presented below.

  • $110,000: For a married couple who are filing jointly.
  • $75,000: This amount is applicable for head of a household, single parent or qualifying widow(er).
  • $55,000: This amount is applicable for married people who are filing their claims separately.

Phase-out Rules
If the modified AGI of the claimant is greater than the limits or threshold amount as specified by the rules, credit amount is reduced. For every $1000, the credit amount is reduced by $50.

Claiming Children on Taxes after Divorce
Only one of the parents is eligible for claiming children on taxes after separation. Custodial parent is the one who is allowed to claim the child. There is also a provision for the non-custodial parent for claiming children on taxes. It can happen only with the consent of custodial parent, if that parent signs the waiver form 8332.

Details presented in the article should cover most of the doubts related to availing credit relief. One should consult an expert in case, a problem/doubt crops up.

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