How to Calculate Child Tax Credit
Taxpayers can qualify for various tax credits to reduce their tax liability, one such credit is the child tax credit. To qualify for the child tax credit, the qualifying child must be under 17 years old and a U.S. citizen or a U.S. permanent resident alien.
Items Needed
- Publication 972
- Visit the Internal Revenue Service (IRS) website and obtain publication 972.
- Input all the data on your federal income tax form as normal until you get to the child tax credit section and access the 972 worksheet.
- Input the number of qualifying dependents and multiply that number by $1000 on line one. For example, you have three qualifying children then you qualify for a maximum of $3000 credit.
- Enter on line two the adjusted gross income amount from l040 line 38, 1040A line 22 or from 1040NR line 37.
- Input any income exclusions from Puerto Rico and from form 2555, 4563 or 2555 EZ on line three, if you file a 1040 form. Input zero if you file either a 1040A or 1040NR.
- Total the amount from line two and three and input on line four.
- Review your modified adjusted gross income (AGI) on line 38 1040 or 1040A line 22 and 1040NR line 37 and input the applicable amount in box five.
- Answer the questions in box six. If you answer no to the question, enter zero. If your answer is yes, continue you working the worksheet.
- Review your adjusted gross income. If your modified adjusted gross income is $110,000 for married filing jointly, $55,000 for married filing separately or head of household $75,000, your child tax credit is less. Take the excess amount from your adjusted gross income and then multiply that amount by five percent to arrive at your child tax credit. For example, your filing status is head of household, and your adjusted gross income is $80,000, subtract $75,000 from that amount and the difference is $5000 multiply that amount by five percent and your reduction is $250. Enter the excess amount in line seven.
- Answer the question on line eight to finalize your tax credit.