Child Tax Credit
Maximum credit: $1,000 per qualifying child.
Adjusted Gross Income (AGI) Phaseout
The credit is reduced by $50 for each $1,000 of modified AGI
above:
• $110,000
Married Filing Jointly.
• $75,000
Single, Head of Household, or Qualifying Widow(er).
• $55,000
Married Filing Separately.
The regular child tax credit is nonrefundable, but if any
part of the credit is disallowed because tax is reduced to zero, the taxpayer
may qualify for the additional child tax credit, which is refundable.
Additional Child Tax Credit
Taxpayers may be able to claim the additional credit if any
portion of the regular child tax credit was disallowed because tax was reduced
to zero before the entire credit was used. The portion of the child tax credit
phased out because of AGI cannot be used to claim the additional credit. The
additional credit is refundable.
Child and Dependent Care Credit
Credit
The credit is 20% – 35% of the smallest of:
• $3,000
($6,000 for two or more qualifying persons).
• Qualified
expenses incurred and paid during the year.
• Include
expenses for care in 2013 that were paid before 2013. Reduce expenses by
dependent care benefits excluded from income.
• Taxpayer’s
earned income.
• Spouse’s
earned income.
Exclusion
Instead of taking the credit, taxpayers may be eligible to
exclude from income an amount up to $5,000 for dependent care benefits received
under an employer plan.
Earned Income Credit (EIC)
The EIC is a refundable credit for low-income earners.
Taxpayers with investment income of more than $3,300 do not qualify.
Requirements for Everyone
The following requirements must be met whether or not the
taxpayer has qualifying children. • Valid Social Security numbers. Taxpayer and
spouse (if filing jointly) must have valid Social Security numbers. Qualifying
children must also have valid Social Security numbers except a child who was
born and died during the year. Adoption and individual taxpayer identification
numbers (ATINs and ITINs) do not qualify. A Social Security number on a card
that reads “Not Valid for Employment” does not qualify. A Social Security
number on a card that reads “Valid for work only with DHS (or INS) authorization”
qualifies.
• The
taxpayer must be a U.S. citizen or resident alien for the entire year. A
nonresident alien can claim the credit if married to a U.S. citizen or resident
alien, and the nonresident alien chooses to be treated as a resident for the
entire tax year by filing a joint return.
• Filing
status may not be Married Filing Separately.
• The
taxpayer may not be a qualifying child of another taxpayer.
• The
taxpayer may not file a tax form relating to foreign earned income.
• The
taxpayer’s investment income must be $3,300 or less.
Taxpayers Without Qualifying Children
Taxpayers who meet all the requirements and who do not have
a qualifying child for the year, can claim EIC if the following additional
requirements are met.
• The
taxpayer must be at least 25, but under age 65, at the end of 2013.
If Married Filing Jointly, either taxpayer can meet the age
test.
• The
taxpayer cannot be the dependent of another person.
• The
taxpayer’s principal place of abode is in the United States for more than half
the year. Residence in U.S. possessions, such as Guam and Puerto Rico, does not
qualify.
Adoption Credit
Credit and Exclusion Amount
A taxpayer can claim a credit of up to $12,970 (2013) and
also exclude up to $12,970 of employer-provided benefits from income for
expenses of adopting an eligible child. The same qualifying expenses cannot be
used for both. Limits apply to the total spent over all years for each effort
to adopt an eligible child. An attempt that leads to adoption and any
unsuccessful attempt to adopt a different child is treated as one effort.
Unmarried persons who adopt a child can divide each limit in any way they
agree.
Eligible Child
A child under age 18 or a person who is disabled physically
or mentally incapable of self care.
The Lifetime Learning Credit is 20% of the first $10,000 of
qualified education expenses paid for all eligible students. The maximum credit
is $2,000 per return regardless of the number of eligible students. There is no
limit on the number of years the credit can be claimed for each student.