Tax Abatement

Child tax credit refund is available for no reason other than your child is living with you. Here is how it works. If your AGI (Adjusted Gross Income) is $110,000 or less (for married people filing a joint return), $75,000 (for single or head-of-household filers), or $55,000 (for married/filing separately), then you will be able to claim a credit for any child living with you. According to the Tax Relief Reconciliation Act of 2001, from 2010 and thereafter, every parent is eligible for a child tax credit refund of $1,000 per child.

The requirement for getting child tax credit refund is for the kid to have a Social Security number, be related to the taxpayer (son, daughter, stepson, stepdaughter, or an eligible foster child), under the age of 17, citizen, national or resident of the US. Keep in mind that it works as a credit against your tax, so it represents a deduction of your actual tax liability. Here is an example of how the procedure goes. Let's say John and Kim have modified AGI of $65,000 in 2011. And they also have two children younger than 17. When they go ahead and estimate their taxes, they say the amout is around $7,000. But after removing the $1000 per child due to the child tax credit refund, their total tax liability would only be $5,000.

There are some tricky things about child tax credit refund that might cause potential complications if you are unaware. First of all, the phase-out of the modified Adjusted Gross Income. If your income is greater than the levels mentioned above, you should know that you don't entirely loose your credit. According to the law, the amount of the total credit you can take is reduced $50 for each $1,000 (or fraction thereof) of modified AGI exceeding the threshold amounts. So for example, if you are married people filing a joint return, and your AIG is $120,000, then you will loose $500 of your credit ($50 x 10, since you are exceeding the limit with $10,000). Have in mind that the phase-out is based on the total dollar amount of the credit so it doesn't depend on the number of children.

To calculate your child tax credit refund, you mist fill out IRS form 8812. The other, much easier method is to use a tax-preparation program and let the program complete the computations for you. And then again, you can always have a tax-agent help you out. To claim additional child tax credit (for individuals who get less than the full amount of the child tax credit), you must file Form 1040, Form 1040A, or Form 1040NR and provide the name and social security number on your tax return (or Form 8901) for each qualifying child.

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