How to Qualify a Dependent Child for Tax Rebates
The worst thing you can do when filing your taxes is pass up important tax-breaks because the paper work is too confusing. Parents, for example, can qualify for up to a $1,000 credit for each dependent child. That can mean a big break, maybe even a refund. Using the long 1040 form it will still only take a few extra minutes to find out how much you can save.
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Instructions
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First you'll need to determine how many of your children qualify for the credit. In general, any child (including extended family and adoptees) under 17 at the end of the tax year who lived with you for more than half of 2008 qualifies. Being away at school or on vacation for extended periods won't disqualify them. Similar exceptions exist for divorced parents, though only one can claim a child in any given tax year.
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Remember, your maximum credit is $1000 multiplied by the number of children that qualify. Once you've got that number, it's time to find out how much of it you will actually get to deduct. If your Adjusted Gross Income (AGI) from form 1040 is less than $110,000 as a married couple filing jointly (half that if you're filing separately) or under $75,000 as a single head of the household, you will deduct the maximum credit. Otherwise, you will have to do a bit more math.
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Understand that the bigger your AGI as compared to the above thresholds, the smaller the credit you'll claim.
Subtract the threshold income from your AGI and multiply that number by 5 percent. Subtract the result from your maximum dependent child tax credit to get your actual dependent child tax credit. -
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Compare your credit to the amount, if any, that you owe. If the credit is smaller than the taxes due, then it's simple subtraction and you're on to the next deduction.
Note that if the credit is the larger than what you owe, the IRS calls it a wash. In other words, your tax amount is the also your maximum child tax credit.
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Tips & Warnings
You might still earn a refund of the difference, when your dependent child tax credit is larger than the amount you owe. Claim the surplus using form 8812. The upshot is that you need to have at least three qualifying children.
