Additional Child Tax Credit - Refundable Credit
List if you receive less than the maximum $1,000 per qualifying child for the Child Tax Credit because it is limited to your tax liability, you may be entitled to receive all or part of your remaining Child Tax Credit as a refundable Additional Child Tax Credit.
If you pay for adoption expenses, you may be able to take a credit for qualified adoption expenses of up to $13,570 per child. If your modified adjusted gross income is $243,540 or more, you do not qualify for the credit. The credit is one of the nonrefundable personal credits and allows taxpayers to carry over any unused credits for up to five years. Returns with the adoption credit can be e-filed.
Child Care Expenses
If you are a working parent, or you were working and are now looking for work, you may be able to claim a credit for your child care. Expenses must be for a child under the age of 13 or a dependent that is unable to care for themselves. The credit may be as much as $1,050 for one qualifying child or $2,100 for more than one child, depending on your adjusted gross income.
In-Home Child Care
Did you pay someone to come into your home and provide child care while you work? If you do, you may actually be an employer who is required to pay employment taxes. If the person you pay provides care in their home, you would not be considered their employer.
Are you a working parent able to claim a credit for child care expenses? If so, you msut provide the IRS with the are provider's name, address, and taxpayer identification number (TIN), which can be a Social Security number or an employer identification number (EIN).
Types of Provider Identification
If the care provider is a daycare center, the taxpayer identification number (TIN) is their employer identification number (EIN). If the provider is an individual, the TIN is usually the Social Security number. If the provider is a church or non-profit group and has no EIN, the words "tax exempt" can be substituted for the TIN.
Earned income for active duty military in a combat zone can be calculated two different ways for the credit for Child and Dependent Care Expenses. You can elect whether or not to include combat pay as earned income. This calculation may affect how much of your dependent care expenses are eligible for the credit. You should calculate your return both ways (including and not including combat pay as earned income) to determine which gives you the more advantageous result.
Do you pay child support? If you do, can that child be claimed as a dependent on your tax return? Child support is neither income to the recipient, nor a deduction for the payer. The custodial parent is the parent the child lives with more than half the year. In order to claim a dependency exemption a signed Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents, must be included in the noncustodial parent's tax return.
Child Tax Credit - Combat Pay
Although combat pay is not included in income for purposes of calculating your federal income tax, combat pay is included as earned income when calculating the Additional Child Tax Credit. Because the amount of this credit is based in part on earned income, this could mean a higher credit for those with low taxable income.
Child Tax Credit - Qualifying Dependent
You may qualify for a credit of up to $1,000 for each qualifying child under age 17 at the end of the year. A qualifying child is your child, stepchild, adopted child, eligible foster child, or descendent of such, or your sibling, stepsibling, or descendent of such. The individual must have lived with you, or the custodial parent, for more than half of the year, must not have provided more than half of their own support, and must be claimed as a dependent by you. Generally, the child must be a U.S. citizen or a U.S. national or resident for some part of the year.
Children's Investment Credit
Does your child under age 18 have investment income? If they do, and the total amount is more than $2,100, part of the amount may be taxed at the parent's rate. The child may file a tax return, including Form 8615, Tax for Certain Children Who Have Unearned Income, or you may be able to file Form 8814, Parent's Election to Report Child's Interest and Dividends, and report your child's income on your return.
Standard Deductio n- Dependent on Another's Return
The standard deduction for an individual for whom an exemption can be claimed on another person's tax return is generally limited to the greater of (a) $1,050, or (b) the individual's earned income plus $350. In no case can the deduction exceed the single standard deduction amount of $6,350 for this year.