How To Claim CHILD TAX CREDIT The Right Way And Add An Extra $2,000 To Your Refund
The U.S. Department of Agriculture estimates that it costs nearly $15,000.00 a year for a middle-class family to raise a child born in 2002 to age 17 (without adjustment for inflation). In recognition of this cots, you can claim a tax credit each year until your child reaches the ago of 17. The credit is currently up to $1,000.00 per child. This credit is in addition to the dependency exemption for the child.
You may claim a tax credit of up to $1,000.00 in 2004 for each child under the age of 17. If the credit you are entitled to claim is more than your tax liability, you may be entitled to a refund under certain conditions.
Generally, the credit is refundable to the extent of 10 percent of earned income over $10,750.00 in 2004.
To claim the credit, you must meet two conditions.
1. You must have a qualifying child.2. Your income must be below a set amount.
The child need not be your own child - he or she can be a stepchild, grandchild, great-grandchild, sibling, stepbrother, stepsister, or a descendant of any of these.
For example, if you support your 16 year old sister and claim her as a dependent on your return, she is a qualifying child. An adopted child is a qualifying child as long as the child has been placed with you by an authorized agency for legal adoption, even if the adoption is not yet final.
The credit amount is reduced by $50.00 for each $1,000.00 of MAGI or a fraction thereof over the MAGI limit for your filing status. The phaseout begins if MAGI exceeds the following limits:
1. Married filing jointly $110,000.002. Head of household $75,000.003. Unmarried (single) $75,000.004. Qualifying widow(er) $75,000.005. Married filing separately $55,000.00
Example: In 2004 you are a head of household with two qualifying children. Your MAGI is $90,000.00. Your credit amount of $2,000 ($1,000 x 2) is reduced by $750 ($90,000 - $75,000 = $15,000 MAGI over the limit) = 15 x 50 = $750. Your credit is $1,250.00 ($2,000 - $750).
HOW TO CLAIM THE CREDIT AND GET A BIGGER REFUND.
If you have three or more children for whom you are claiming the credit, you may qualify for a larger refund, called the additional child tax credit.
The child tax credit is scheduled to decline to $700 per child in 2005 and then increase to $800 in 2009, and $1,000 in 2010 and later years.
You figure the credit on a worksheet included in the instruction for your return. You claim the credit in the "Tax and Credits" section of Form 1040 or the "Tax, Credits, and Payments" section of form 1040A; you cannot claim the credit if you file form 1040EZ
If you are eligible for the additional child tax credit, you figure this on Form 8812, Additional Child Tax Credit.
Mr. Patel is a widely recognized and well respected authority on Personal Income Tax matters (Single Parents, Married Families, Small Business Owners). He put his Harvard MBA on hold to start his own Accounting firm and help everyday people just like you from all walks of life to cut your tax bill in half (by at least $1,250 - $7,500). His firm has 50+ years of experience helping everyday people just like you from all walks of life. He can help you file you Income Tax Return and put a guaranteed bigger refund back in your pocket TODAY regardless of where you live in America. Patel Financial Services has served diverse clients from all backgrounds from ALL OVER AMERICA; all the way from Maine and Florida to California and Texas. To sign up for his newsletter titled "The Wealth Builder & The Tax Cutter" visit his website at http://www.Patelfinancialservices.com or send a blank email to Subscribe@patelfinancialservice.com with the word "Subscribe" in the subject line.
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