Tax Season Is Upon Us

CHILD CREDIT
Overview
Cut your tax bill by up to $1,000 for each qualifying child.
Once modified adjusted gross income (MAGI) exceeds $110,000 if Married Filing Jointly, $55,000 if Married Filing Separately and $75,000 for all other filing statuses, the credit amount decreases by $50 for every $1,000 (or fraction of $1,000) it exceeds the limit.
If your credit is limited by your tax and your earned income is more than $8,500, you may be eligible for the additional Child Tax Credit. You also may be eligible for this credit if you have at least 3 eligible children and the Social Security and Medicare tax you paid is more than your Earned Income Credit. What is the Child Tax Credit?The Child Tax Credit is a credit worth up to $1,000 for each qualifying child. If you have 4 children, the credit can cut your tax bill by up to $4,000. Remember, a credit offsets your tax bill dollar for dollar. A child must meet 5 criteria for you to receive child-related tax benefits. He or she:
must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of them
must be younger than 17 at the end of the year
must not have provided more than half of his or her own support
must live with you more than half the year
must be a U.S. citizen, U.S. national or resident of the U.S.Note: Beginning with the 2009 tax return, the child must be your dependent and the child must be younger than the person claimingthe credit.Child Tax Credit for Individuals with Higher IncomesThe Child Tax Credit is available regardless of your filing status. However, your credit is reduced if your modified adjusted gross income (MAGI) is more than:
$110,000 if Married Filing Jointly
$75,000 if Single, Head of Household or Qualifying Widow(er)
$55,000 if Married Filing SeparatelyFor every $1,000 (or fraction of $1,000) your MAGI exceeds the trigger point, you lose $50 of credit. For example, if you file a joint return and your MAGI is $115,000, the extra $5,000 exceeding the limit would reduce your creditby $250. So if you have only 1 qualifying child in 2008, your credit would be $750. If you have 3 qualifying children, your credit would be $2,750 ($3,000 minus $250).Additional Child Tax CreditThe Child Tax Credit can't reduce your tax below zero. However, if your Child Tax Credit is limited by your tax, you may be eligible for the additional Child Tax Credit, even if your tax liability is zero. You may be eligible if:
your taxable earned income is more than $8,500 (for 2008)
you have 3 or more eligible children and the Social Security and Medicare tax you paid is more than your Earned Income Credit If you qualify, you'll need to file Form 8812