If you qualify for child tax credit 2016, it will be a direct decrease in your federal income tax obligation. In other words, it will lower the amount that you may be obligated to pay to the government. The credit for 2016 tax returns is up to $1,000 for each qualifying child.
To qualify for the child tax credit, you (and the child) MUST have a tax identification number no later than the due date of your 2016 tax return (this includes extensions). So it’s a waste of your time trying to even get this credit if you know you and the child don’t have a tax id number by this deadline.
To be considered a qualified child, the child must pass six tests, and these are: Age, Relationship, Support, Dependent, Citizenship and Residence.
Let go over each…
6-Point Child Tax Credit Qualifications
1. Age: Each child had to have been under the age of 17 at the end of 2016 in order fall within the child tax credit age limit. No if, ands or buts. So if they were 17 or older at the end of 2016, doesn’t matter if it was only by a day, they don’t qualify.
2. Relationship: The qualifying child could be your son, daughter, sibling, relative, stepchild, stepbrother, foster child, grandson, granddaughter or any other minor who primarily depended on you for support.
3. Support: In 2016, the child must not have provided more than half of their own support.
4. Dependent: The child needs to be claimed as a dependent on your 2016 tax return in order to qualify.
5. Citizenship: The child must have been a U.S. Citizen, U.S. National or U.S. Resident Alien in order to qualify. And they must have had this United States status in 2016.
NOTE: There are exceptions to this rule, such as absences in the home by you or the child for special circumstances such as hospitalization, military service, school, juvenile facility detention, vacation, business, etc. There are other exceptions as well that could sway in your favor, so be sure to discuss this area in detail with your accountant or tax professional.
6. Residence: The child must have lived with your for more than half the year in 2016.
Child Tax Credit Income Limit
The credit has limitations if your modified adjusted gross income is above a particular amount. The total amount at which this phase-out starts varies based on your tax filing status. For tax payers who are married filing jointly, the phase-out starts at $110,000. For tax payers who are married filing a separately, phase-out starts at $55,000. And for single individuals and all other taxpayers, the phaseout starts at $75,000. Moreover, the Child Income Tax Credit is oftentimes limited by the amount of the income tax as well as alternative minimum tax you may owe.
Keep in mind that if you get less than the full child tax credit, you may also be allowed to take what is called the “additional child tax credit”. This added credit may very well result in you getting a tax refund – even if you don’t owe any taxes. So definitely check into this!
You took care of the child in 2016 so definitely don’t sleep on applying for this child tax credit – if you can get it! Coz if you don’t claim it, don’t expect the IRS to come knocking on your door saying they owe you money. That’s not gonna happen.
For more details on Child Tax Credit 2016, refer to IRS Publication 972. You can also take the child tax credit qualifications test on the IRS.gov website located here: Is My Child a Qualifying Child for the Child Tax Credit? In addition, it would be wise to consult with a tax professional or professional tax software for maximum results.