Child Tax Credit
The Henssler Financial Group Position Paper

Generally, the Child Tax Credit may allow you to deduct $1,000 for each child under the age of 17 whom you also claim as a dependent.

The IRS defines "child" as your child by birth, stepchild, eligible foster-child, or other descendant. Your qualifying child must have been under the age of 17 at the close of the tax year.

Taxpayers with high incomes may not qualify for the credit. Married taxpayers, who file jointly and have an annual adjusted gross income of more than $110,000, lose $50 of the credit for every $1,000 above $110,000. Likewise, single taxpayers, who have an annual adjusted gross income of $75,000, lose $50 for every $1,000 above $75,000. Nevertheless, if you are eligible for the child tax credit, you may take it against either the regular tax or any alternative minimum tax that you may owe.

The new law allows the credit to be claimed against the alternative minimum tax permanently and repeals the AMT offset of refundable credits. The credit is refundable to the lesser of either the unclaimed portion of the nonrefundable credit amount or the extent the taxpayer's earned income exceeds 15% of $12,050 in 2008. Taxpayers with three or more children may use an alternative method to calculate their refundable child tax credit. Under this method, the refundable credit is the excess of the taxpayer's share of Social Security taxes (including one-half of any self-employment taxes) over his or her earned income credit for the tax year.

If you would like any further information regarding this issue as well as any other tax related issue, please contact The Henssler Financial Group Tax & Accounting Division at 770-428-4025.