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A child tax credit is a tax credit based on the number of dependent children in a family.
United States
In the United States a taxpayer can claim a $1000 (2005) per child tax credit if he has a "qualifying child". According to the IRS, the child must be claimed as dependent which requires the child to have a Social Security number and be:
- Related to the taxpayer (son, daughter, stepson, stepdaughter, or decedent, brother, sister or their descendant, or foster child).
- Under the age of 17 as of the end of the year. This means that if your child turns age 17 during the tax year, the child is not eligible for the child tax credit. This is true even if his or her 17th birthday falls on Dec. 31. If the child is age 17 anytime during the year, he or she is not qualified for the credit.
- A citizen, national, or resident of the U.S.
The child tax credit is available to taxpayers who can reduce their tax liability. If you do not pay any taxes then you can not get this credit. The credit is not available to those who earn too much money. For a couple filing jointly the maximum adjusted gross income is $110,000.
There is additional child tax credit for those who do not meet the two requirements above. This requires filing form 8812 and may allow some of the credit to be realized.
Negative Population Growth has proposed eliminating the child tax credit for children born after a specified date in order to encourage smaller families.
United Kingdom
In the United Kingdom, a family with children and an income below about £58,000 can claim child tax credit on top of child benefit. The tax credit is "non-wastable" - i.e. it is paid whether or not the family has a net tax liability - and is paid in or out of work. Higher rates are paid for disabled children. It is integrated with the working tax credit, which also provides support for childcare costs.
For those with an income below £52,500 this is worth £547.50 a year as a family element (£1,095 if they have a baby under 1 year old).
For those with an income below about £15,000, there is an additional £1,690 per child per year, and this is tapered away at a rate of 37% as income rises.
External link
Reference
- Lewis, Roy: The Child Tax Credit, The Motley Fool, Feb. 21, 2003.
Taxation in the United States | Taxation in the United Kingdom
"Child tax credit"