How To Calculate the Child Tax Credit

Our program automatically calculates the Child Tax Credit and Additional Child Tax Credit based on the dependents and income entered into your account.

With the Child Tax Credit, you may be able to reduce the federal income tax you owe up to $ 2,000 for each qualifying child under age 17. A qualifying child for this credit is someone who:

• Claimed as your dependent,
• The child must have an SSN (ITIN is not allowed for a child tax credit or additional child tax credit)
• You were under 17 at the end of the tax year,
• The child did not provide more than half of her support during the year.
• The child lived with you for more than half the year.
• The child did not file a joint tax return for the year (or is filing it only to claim a refund of tax withheld or estimated tax paid)
• Is your son, daughter, foster child, grandchild, stepchild or eligible foster child, brother, stepbrother, or descendant, and
• You are a US citizen or resident alien.

The credit is limited if your modified adjusted gross income exceeds a certain amount. The amount at which this elimination begins varies according to your filing status:

• Married filing joint return $ 400,000
• Married filing separately $ 200,000
• All others $ 200,000

You must have at least $ 2,500 in earned income on your return to claim the credit. Additionally, the Child Tax Credit is limited by the amount of income tax you owe, as well as any alternative minimum tax you owe. For example, if the amount of the credit you can claim is $ 2,000, but the amount of your income tax liability is $ 400, the credit will normally be limited to $ 1,600. If the amount of credit you can claim is $ 2,000, but the amount of your tax liability is $ 0, or you are waiting for a refund, you cannot claim the Child Tax Credit. See below to see if you can claim the Additional Child Tax Credit through one of the "Exceptions."

Exceptions: There are two exceptions to this general rule. If the amount of your Child Tax Credit is more than the amount of income tax you owe, you may be able to claim some or all of the difference as an Additional Child Tax Credit. The program also automatically calculates any additional child tax credits.

First, you can claim up to 15 percent of the amount for which your earned income exceeds $ 2,500 (15% of the result of Your earned income - $ 2,500). For members of the Armed Forces who served in a combat zone, nontaxable combat pay counts as earned income when calculating this credit limit.

Second, if you have three or more qualifying children, you can claim up to the amount of Social Security taxes you paid during the year, less any Earned Income Tax Credit you receive. If you qualify under these two exceptions, you will receive the higher of the two amounts, up to the difference between your tax liability and your regular Child Tax Credit.

Read more: How To Calculate the Child Tax Credit

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Hridoy Ahmed Joined: December 15th, 2019