If you have qualifying children, the child tax credit can be worth as much as $1,000 per child. The actual amount is dependent on your income.
In order to determine who is a qualified child for the purposes of this credit the child must meet the qualifying criteria found in the seven tests. These are age, relationship, support, dependent, joint return, citizenship, and residence.
The child must meet these qualifications
A qualifying child must be under the age of 17 at the end of the year. In order to claim a child for the purpose of the child tax credit they must be either your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendent of one of these individuals.
This includes your grandchild niece or nephew. In regards to adopted children, these are always treated as your own child and includes children lawfully placed with you for legal adoption.
The support test is met if the child did not provide more than half of their own support during the year. You also must claim the child as a dependent on your tax return.
Dependent children being used for the purpose of the child tax credit must be a U.S. citizen, U.S. national, or U.S. resident alien and cannot file a joint tax return for the year unless they do so solely to claim a refund.
Tax credit limit
If your modified gross income is above a certain amount the credit is limited. Depending on your filing status the amount at which the phase-out begins varies. Married taxpayers who are filing a joint return, it begins at $110,000.
The same married couple filing separate returns, the phase-out would start at $55,000. For all other filers the phase out begins at $75,000. Additionally the minimum income tax you owe as well as any alternative minimum tax you owe limits the child tax credit.
Finally, if your child tax credit exceeds the amount of tax you owe you may be eligible to claim the additional child tax credit.