Child tax credit

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A child tax credit is a tax credit based on the number of dependent children in a family.

1 United States
2 United Kingdom
3 External link
4 Reference

[edit] United States

In the United States a taxpayer can claim a $1000 (from 2003 on) 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 reduces tax liability. For a married couple filing jointly, the credit begins to be reduced if the adjusted gross income exceeds $110,000.

For many families, the child tax credit will exceed their tax liability. In many such cases, the unused portion of the child tax credit is refundable as the "additional child tax credit." The amount that is available as a refund depends on the amount of earned income, and in certain circumstances the amount of social security and medicare taxes paid. Refer to IRS form 8812 and instructions.

[edit] 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 £50,000 this is worth £545 a year as a family element (£1,090 if they have a baby under 1 year old).

For those with low incomes, there is an additional £1,765 per child per year, and this is tapered away at a rate of 37% as earnings increase above £14,155 per year.