File folders with labels spelling out TAX to represent the child tax credit.

What Is the Child Tax Credit Phase Out?

The child tax credit is a credit that working individuals can claim on their income taxes to save them some money each tax year. The credit can either reduce the amount of money a person has to pay back, or it can provide a tax refund for families who owe little to no taxes. Taxpayers can receive up to a $1,000 allowance per child toward their taxes. The child tax credit phase out occurs when a taxpayer has reached the threshold that the Internal Revenue Service has put in place. The threshold is different for individual taxpayers and married taxpayers.

What Is the Child Tax Credit Phase Out?

A married couple filing separately can receive a full $1,000 of child tax credit per child if each individual has an annual income of $55,000 or less. Once the person’s income goes over the limit of $55,000, the tax credit reduces by $50 for every $1,000 that person makes over the threshold. Married persons who file separately receive the least amount of benefits from the tax system. Such persons cannot claim certain credits, such as earned income credit.

The child tax credit phase out for married couples who file their taxes jointly is $110,000. The phase out for other persons, such as head of household, qualifying widows or widowers, and single filers is $75,000. The credit decreases by $50 for every $1,000 the person or couple makes over the threshold until the tax eventually becomes nonexistent. For example, a married couple that earns $130,000 or more will not be eligible to receive anything back from the child tax credit.

Qualifying Factors for the Child Tax Credit

To be eligible for the child tax credit, taxpayers must meet certain criteria other than income. First, the children that they are claiming must be included on their income tax statement as dependents. Next, the children must be younger than 17 years of age. Additionally, the children in question must have a qualifying status in the taxpayer’s life. Children who qualify a person for the child tax credit include blood children, adopted children, stepchildren, foster children, siblings, or grandchildren. No one else can be able to claim the child as a dependent. Therefore, the taxpayer must have paid expenses for the children and housed them for more than six months out of the year.

The Amount of Child Tax Credit

Each qualifying child can earn a taxpayer $1,000 toward his or her income taxes. A taxpayer that has no tax obligation will be eligible to receive a refund from his or her income taxes. It is highly advisable for a taxpayer to contact an experienced tax specialist for help with filing tax papers.

Last Updated: August 04, 2014