| If you who have dependent children that are | | | | the refundable portion of the CTC the taxpayer was |
| younger than 17 by the end of the tax year then | | | | required to have earned income in excess of $12,550. |
| you may be eligible for a $1,000 Child Tax | | | | The Recovery Act now reduces the earned income |
| Credit(CTC) for each child. | | | | minimum from $12,550 to $3,000. |
| How to Claim the Credit - To claim the credit there | | | | Refund Amounts - The amount of the CTC is not |
| are requirements for the qualifying child, requirements | | | | permitted to exceed your tax liability. For example, |
| for the taxpayer and certain limits on the amount of | | | | when the tax liability is zero, then the CTC is zero |
| the credit. In general, a qualifying taxpayer must | | | | because there is no liability to reduce. Fortunately if |
| follow the same rules as claiming a dependency | | | | you are not able to take the full amount of the CTC |
| exemption with the exception that the child must be | | | | Credit then you may be entitled to claim an |
| under the age of 17 before December 31, 2009. In | | | | "Additional" Child Tax Credit. |
| order for the child to qualify, the child must not have | | | | What Happens If I am Not Eligible for the CTC - In |
| provided his or her own support during 2009 and child | | | | you do not qualify for the CTC, then you may |
| must have lived with the taxpayer for more than half | | | | qualify for the "Additional" Child Tax Credit("ACTC). |
| of the year. In addition the child must be the | | | | The amount of the "Additional" Credit is up to $1,000 |
| taxpayer's child, stepchild, adopted child,eligible foster | | | | for each qualifying child. What is good about this |
| child, grandchild, brother, sister, stepbrother, | | | | provision is that the ACTC may be able to lower |
| stepsister, etc. Further, a qualifying child must be a | | | | your tax liability to below zero and you may be able |
| U.S. citizen or resident of the United States. | | | | to obtain a refund for that excess. To qualify for this |
| Income Limitations - The credit amount that you can | | | | " Additional" Credit, you must have a tax liability that |
| claim for a CTC is dependent upon the your tax | | | | is less than the allowable child tax credit, meet the |
| liability, modified adjusted gross income and filing | | | | requirements of the regular CTC and earn more than |
| status. The CTC starts to phase out when your | | | | $11,750 during 2009. If this event occurs, you may |
| modified adjusted gross income is $110,000 for joint | | | | be entitled to receive a refund for the ACTC. In |
| filers or $75,000 for single taxpayers or $55,000 for | | | | order to compute this Additional Child Tax Credit |
| married taxpayers filing separately. If the credit is | | | | there are more limitations and requirements that are |
| greater than your tax liability, then the you may be | | | | not within the scope of this article and you should |
| eligible for a refundable credit. This additional credit is | | | | read IRS Publication 972. |
| known as the "Additional" Child Tax Credit and is | | | | Summary - In summary, the CTC is nonrefundable |
| discussed below. | | | | which limits taxpayer's credit to their tax liability. In |
| Changes for 2009 The 2009 Recovery Act increased | | | | the event as a taxpayer is not able to use the entire |
| the eligibility for claiming the credit by reducing the | | | | amount of the $1,000 credit then they may be |
| earned income threshold. Previously to be eligible for | | | | eligible for the ACTC which is a refundable tax credit. |