Child Tax Credit
What does Child Tax Credit mean?
The Child Tax Credit is an amount allowed by the Internal Revenue Service for taxpayers to reduce their tax liability for each qualifying child. A qualifying child is typically someone under the age of 17 who is a descendent of the taxpayer and can be claimed as a dependent.
As of 2012, the Child Tax Credit was capped permanently at $1,000 per qualifying child. The child tax credit is fully available to individuals earning up $110,000 per year. For those earning more than $110,000 annually, the amount of the allowed Child Tax Credit begins to phase out, until it is phased out entirely when earnings exceed $130,000 annually.
Since the Child Tax Credit reduces the actual tax liability of the taxpayer rather than the taxpayer's taxable income, it is possible the Child Tax Credit will exceed the taxpayer's tax liability. When this happens, the taxpayer may receive a refund of some or all of the unused Child Tax Credit.