How Much is the Child Tax Credit?
The IRS offers a tax credit for each qualifying child you have. We’ve already outlined what that means here in a previous post . The IRS must really like parents because the child tax credit is worth quite a bit. For each child who meets the qualifications, you get a tax credit $1000! Now let’s discuss some of the limitations on this fabulous tax credit.
You Can’t Make Too Much Money
Now, this sounds like a cute proverb…you can never be too rich or too thin! But it’s actually a limitation on how much the child tax credit will be worth to you. To find out if you make too much money to qualify for the Child Tax Credit, you will need to know what your Modified Adjusted Gross Income will be for the tax year.
What’s My Modified Adjusted Gross Income (MAGI)?
It’s your Adjusted Gross Income (AGI) plus a few things added in. So, to calculate your MAGI, first get your AGI. If you’ve done your taxes, it’s line 37. Basically, it ‘s your income minus certain deductions like…
- IRA contributions
- tuition & fees
- educator expenses
- HSA contributions
- moving expenses
- self-employment tax deduction
- self-employed retirement contributions
- self-employed health insurance deduction
- student loan interest deduction
Then, to arrive at your MAGI, you take your AGI and add back in numbers 9, 1, and 2 plus any foreign income.
So now you have your MAGI…does this change how much your Child Tax Credit is going to be? The answer is “yes” if your MAGI is over $75,000 (for an individual). The credit doesn’t go away, it just begins to phase out at that income level. For married couples filing jointly, the phase-out starts at $110,000 MAGI. If you are married filing separately, the phase-out starts at $55,000.
I Don’t Owe Much Tax…Now How Much is the Child Tax Credit?
Sorry, but if you don’t owe much in taxes anyway, the Child Tax Credit isn’t going to help you much. You only get credited on a tax bill…they don’t give you money back for this credit. It’s nonrefundable. in other words. If you are in this situation, you should find out about the Additional Child Tax Credit. which is refundable.Source: child-tax-credit.net