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Additional Child Tax Credit

The Additional Child Tax Credit

If you didn’t qualify to get the full $1000 per child on the Child Tax Credit, then see if you can claim the Additional Child Tax Credit.  Why wouldn’t a taxpayer receive the full amount of the child tax credit?  Because you didn’t owe much tax to begin with.

If you had three qualifying children and claimed the full $1000 per child, that’s $3000 in Child Tax Credit you are claiming.  Let’s say your children met all six qualifications and your Modified Adjusted Gross Income is below the limitations for phase-outs.  Everything is looking good as far as getting that $3000 child tax credit .

But the whole thing falls apart when you complete your tax return and find that you only owe $800.  The Child Tax Credit cannot be given to you in a refund, so it’s called non-refundable .  Therefore, the most the Child Tax Credit can do for you this year is to wipe out that $800 bill you have on your tax return.

The Additional Child Tax Credit

But wait, there’s something you can do.  Apply for the Additional Child Tax Credit. which is refundable.  You’ll need IRS Schedule 8812, which is part of IRS Form 1040.  This is called The Child Tax Credit.   The bottom half of the sheet is for the Additional Child Tax Credit.  Take a look:

If you use the sheet and it turns out you qualify for the Additional Child Tax Credit, you will claim it on line 65 of IRS Form 1040.  You cannot use IRS form 1040 EZ if you are claiming the Additional Child Tax Credit.

IRS Publication 972 is a good resource for this credit.  It’s located here on the IRS website.  Click on the link to the Additional Child Tax Credit or go directly there by clicking this .


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…

  1. IRA contributions
  2. tuition & fees
  3. educator expenses
  4. HSA contributions
  5. moving expenses
  6. self-employment tax deduction
  7. self-employed retirement contributions
  8. self-employed health insurance deduction
  9. 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.

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