How Does the Child Tax Credit Work?

Tax Tips

We’ve seen some confusion around the Child Tax Credit, particularly around when kids drop off eligibility when they turn 17.

Here’s a brief explanation of the rules behind this:

You can get the $1,000 credit per child, but only if the child hasn’t turned 17 by the end of the year… meaning December 31st. So for 2007, this means that your kids who are 16 or younger as of December 31, 2007, count toward the credit, but your 17-year-olds and above don’t. Even if your child turns 17 on December 31, he still doesn’t count toward the credit… it doesn’t matter that he was 16 for most of the year. It’s the age on December 31, 2007, that counts.

We also get questions about the phasing out of the credit. As with many tax benefits, the child tax credit gets limited the more income you make. If you’re married and filing a joint return, your credit starts getting reduced once your adjusted gross income (line 37 of Form 1040, with certain adjustments) goes higher than $110,000. The credit is reduced by $50 for every $1,000 that your income is above $110,000.

If you’re filing as head of household, the amount is $75,000 instead of $110,000.

There’s an article on that explains the rules and also talks about the Additional Child Tax Credit, which makes your refund higher in certain situations. Check it out!


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