The Child Tax Credit for 2012 will once again be $1,000 per qualifying child. This tax break will reduce the tax burden of millions of middle income families. Here's how it works.
First, it's a credit, not a deduction so whatever your tax bill is, you get to take it off what you owe the government. So if you owe Uncle Sam $5,000 and you have 3 qualifying kids, you will only owe the government $2,000. The credit is in addition to any exemptions you already get, so those kids are costing you a lot less as long as you have earned income. In certain cases where you have no tax due you can apply for an Additional Child Tax Credit that will give you a refund.
Child Tax Credit Qualifications:
In order to claim the credit, you need to meet the following requirements:
1. Your dependents (kids) need to be a U.S. citizen or a U.S. resident. They need to be your adopted or blood daughter, son, stepchild or grandchild. If you have foster kids, they need to have lived with your all of 2012.
2. You must provide a social security number.
3. They must be age 16 or younger (your high school senior won't get you anything!).
4. Your child cannot have paid for more than half of their own support
5. You must claim them as a dependent AND they have to live with you for at least half of 2012.
And the credit does not affect the exemptions you take for dependents. The credit is in addition to your exemptions.
2012 Child Tax Credit Amount:
While the maximum of the tax credit is $1,000 per child, higher income families and lower income families may see considerably less than this amount.
Higher Income Phaseout:
The tax credit phase out BEGINS in the following situations:
- Married, Filing Jointly: AGI > $110,000
- Married Filing Separately: AGI > $55,000
- Other filing statuses: AGI> $75,000
If you are the average middle income family with kids, you'll likely benefit from this 2012 tax credit.
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