Child Tax Credit

Overview

What is the Child Tax Credit?

The Child Tax Credit is a federal tax credit for families with children under age 17. It is designed to lessen the impact of income taxes for families raising children. Qualifying persons who file federal tax returns get back some or all of the federal income tax withheld from their pay during the year. In addition, some workers whose earnings are too low to owe any taxes can get cash back from the credit.

Who can get the Child Tax Credit?

The Child Tax Credit is available to families with qualifying children under age 17 at the end of 2007. In addition to being under age 17, a qualifying child must meet one of the following criteria:

1. The child is a son, daughter, stepchild, grandchild, or adopted child, and has lived with the family for at least six months in 2007, OR

2. The child is a brother, sister, stepbrother or stepsister -- or a descendant of these relatives -- who lived with the family for at least six months in 2007, OR

3. The child is a foster child placed with the taxpayer by an authorized agency who lived with the family for at least six months in 2007.

A qualifying child must have either a Social Security number or an Individual Taxpayer Identification Number (ITIN), and must be a U.S. citizen or a resident alien.

**A taxpayer does NOT have to claim the child as a dependent on his/her tax return in order for the child to be a qualifying child for the Child Tax Credit.

There is an exception to these rules: A non-custodial parent who is allowed to claim a child as a dependent according to a divorce or separation agreement is entitled to claim the child for the Child Tax Credit. The non-custodial parent should attach IRS Form 8332, "Release of Claim for Child of Divorced or Separated Parents," which must be signed by the custodial parent. These rules for non-custodial parents apply only to the Child Tax Credit, and do not apply to the Earned Income Tax Credit.

Families must have taxable earned income above $11,750 to qualify for the Child Tax Credit refund.

Workers, and qualifying children, must have either a Social Security number or an Individual Taxpayer Identification Number (ITIN). The IRS provides ITINs to people who are unable to obtain a Social Security number. A Social Security number is not necessary for the Child Tax Credit; an ITIN is sufficient. This is different from the rules for the Earned Income Tax Credit, which require a Social Security number.

How much can families get from the Child Tax Credit?

The Child Tax Credit is worth up to $1000 per child. The credit is partially refundable for families with earned income above $11,750 during 2007. "Refundable" means that the credit provides cash back if no taxes are owed. Not all families qualify for the full credit. In general, the credit is phased in as earned income goes above $11,750, until the maximum credit is reached. The credit is gradually phased out at very high income levels.

Does the Child Tax Credit affect eligibility for the Earned Income Credit (EIC)?

Receiving the Child Tax Credit does not affect Earned Income Credit eligibility or benefits. Likewise, receiving the EIC does not affect the Child Tax Credit eligibility or benefit levels. Families that meet eligibility criteria can receive both credits.

Will getting the Child Tax Credit affect eligibility for welfare benefits?

The Child Tax Credit -- and other tax credits -- do not count as income in determining eligibility for benefits such as W-2, Medicaid, Food Stamps, SSI, or public or subsidized housing.

Claiming the Child Tax Credit

What is the procedure for claiming the Child Tax Credit?

	Claimants must file a federal tax return to receive the Child Tax Credit, even if they do not owe taxes.
	File Form 1040 or 1040A. To claim the refundable portion of the credit, also complete Form 8812.
	Non-custodial parents should also attach Form 8332, "Release of Claim for Child of Divorced or Separated Parents," signed by the custodial parent.
	The instructions for determining eligibility, and the amount of the credit, are found in the instruction booklets accompanying the tax forms.
	If taxes are owed, the Child Tax Credit will reduce or eliminate the tax. If no taxes are owed -- or if the tax liability is less than the maximum value of the credit -- some or all of the credit may be provided as a check from the IRS. Form 8812 is used to determine the refundable portion of the credit.

Where can families get help filing for the Child Tax Credit?

	The Volunteer Income Tax Assistance (VITA) program provides free tax assistance in counties throughout Wisconsin. Follow this link for information on VITA site locations and hours .
	Taxpayer Counseling for the Elderly (TCE) provides free tax assistance for the elderly, as well as for persons eligible for the Earned Income Credit or the Homestead Credit. Follow the above link for TCE sites in Wisconsin. Information is also available by phone from the AARP at 1-888-227-7669.

Download tax forms and publications

Form 1040 (1040 Instructions)

Form 1040A (1040A Instructions)

Form 8812

This website is an educational resource only. For specific tax questions, seek professional tax assistance or contact the IRS hotline at 1-800-tax-1040.

Last modified on 01/28/08

Cooperative Extension

Page author: Judi Bartfeld (bartfeld@facstaff.wisc.edu)