In: Accounting
Discuss the two most common credits associated with children, the Child Tax Credit, and the Child Care Tax Credit. What are the eligibility requirements to take the credit? How is the credit calculated? Does the taxpayer’s income affect the credit? Are any parts of the credits refundable?
THE CHILD TAX CREDIT: The child tax credit is a type of credit given to the minors or under the age of 17. Under this credit the credit given to children is up to $2000 per child. It is given to the people for bringing up the child. The credit is less by 5% of gross income. It is not necessary to be working to claim Child Tax Credit.
ELIGIBILITY:
1.The age of the child must be under the age of 17.
2. The relationshio or child with parents is neccessary it can be own child or a step child.
3.The child must be depend on the tax return.
4. The child must be a citizen of U.S.
5. The income must be under the certain amount otherwise the credit gets reduce.
THE CHILD CARE TAX CREDIT: It is a type of credit which can only claim by working parent for the children under the age of 13. It provides a credit of around 20-35% of the total cost of care expenses in a particular child or any dependent.
ELIGIBILITY:
1. The child must be under the age of 13.
2. The income of the family must be less than $150000.
To calculate the child care tax credit you should multiply your expenses by the tax credit rate for your family income.
Yes the income of the tax payer effects the credit provided to the child as the income must be less to claim the credit. The child tax credit is nonrefundable credit against income taxes of $1000 per qualifying child. The child care tax credit is also non refundable , so it is not worth if you owe no incometax.