Asian Journal- The Filipino-American Community Newspaper

IN AN effort to assist financially strapped families, the Internal Revenue Service (IRS) has lowered the threshold to qualify for the Child Tax Credit (CTC). In 2008, a family should have earned at least $8,500 to be able to claim the CTC. However, for 2009 and 2010, the earning requirement has been decreased to $3,000.

The Child Tax Credit (CTC) is a federal tax credit, worth up to $1,000 for each qualifying child under age 17 claimed on the taxpayer’s federal tax return. This is a refundable credit, meaning the taxpayer can get the credit even if they owe taxes. In essence, the amount that would have been owed is decreased by the amount of the credit. For example, if a taxpayer owes $5,000 but has two eligible children for the CTC, then taxpayer pays only $3,000 to the IRS.

To be eligible for the Child Tax Credit refund, a single or married worker must:

– have a qualifying child under age 17;

–have taxable earned income above $3,000; and

– have either a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN). ITINs are issued by the IRS to individuals who are unable to obtain a Social Security number. Immigrant workers with either type of number may be eligible for the Child Tax Credit.

There are cases where a low income family might become eligible for both the CTC and the Earned Income Tax Credit (EITC), which I discussed weeks ago.

Although there are overlapping criteria between the two tax credits, there are striking differences as well in how they could be claimed. For instance, there will be families who qualify for the CTC but are ineligible for EITC.

A child claimed for the Child Tax Credit must be under age 17 at the end of 2009. The child must live with the worker for more than half the year in the US and must be either a citizen or a resident alien. "Qualifying children" include: sons, daughters, stepchildren, grandchildren, and adopted children. They may also be brothers, sisters, stepbrothers, or stepsisters – as well as descendents of such relatives. Foster children can be claimed but only if they are placed with the worker by an authorized government or private placement agency.

The Child Tax Credit is available regardless of your filing status. However, your credit is reduced if your modified adjusted gross income (MAGI) is more than:

– $110,000 if Married Filing Jointly

–$75,000 if Single, Head of Household or Qualifying Widow(er)

– $55,000 if Married Filing Separately

For every $1,000 (or fraction of $1,000) your MAGI exceeds the trigger point, you lose $50 of credit.