7 Child Tax Credit Requirements Explained

child tax creditA tax credit to assist families with offsetting tax liabilities is the Child Tax Credit. The credit is capped at $1,000 per qualifying child. Determining eligibility is done automatically if you file your tax return electronically. There are seven pieces of criteria that you must meet before being able to claim the credit.

The steps to determine eligibility for the Child Tax Credit are:

  1. Age Test

Qualifying children must be age 16 or younger on December 31 of any given tax year.

  1. Relationship Test

In terms of relationship, the child to adult relationship must be one of the following:

  • A biological child
  • A stepchild
  • An adopted child (or in the process of adoption with proper paperwork)
  • A foster child placed by a court or proper authority agency.
  • Step-siblings that you care for
  • Nieces and nephews in your care
  • Grandchildren in your care
  1. Support Test

Parents and legal guardians must provide more than half of a child’s financial needs for an entire tax year to qualify.

  1. Dependent Test

To be able to qualify as a dependent, the relationship test must first be passed. The child cannot be over age 18, unless the child is still in school. If your child is still in school, they may qualify as a dependent until their 23rd birthday and must be a student, full-time, at least five months of the year. The child also qualifies if he or she has a permanent disability and age does not apply with permanent disability cases.

The child must also reside with you for more than half of the year and not have paid half or more of their own financial needs.

  1. Citizenship Test

Qualifying children must be U.S. citizens. They also qualify if they are a documented U.S. resident alien or U.S. national. U.S. national status is in regards to a person born in American Samoa or Commonwealth of the Northern Mariana Islands.

  1. Residence Test

A child must live with you for more than half of a tax year. If a child was born in or passed away in a tax year, they qualify as a living with you for the whole tax year.

Some special circumstances, such as military deployment/service, juvenile incarceration, and medical reasons count as time living with you. Also qualifying are business-related absences, school exceptions and vacation-related exceptions.

For separated parents with custody agreements, additional exceptions apply. These exceptions are addressed on lines 6c and 51 of your 1040. If you file a 1040A form, it is lines 6c and 33 to pay attention to.

  1. Family Income Test

If your adjusted gross income exceeds income thresholds, the amount of your Child Tax Credit is reduced.

The income thresholds are:

  • $55,000 for married filing separately
  • $75,000 for single, head of household, widow/widowers
  • $110,000 for married filing jointly

Reductions of $500 per $1,000 over the income threshold are in place.

Additional child tax credits are also available.

Five of the Most Common Tax Questions for 2017

Tax season will be here before we know it. Therefore, tax questions will be being asked left and right. There will be questions about claiming parents as dependents, deducting books for college and more. Therefore, we decided to put together a list of five of the most common tax questions.

What documents are needed to do my taxes?

The two common forms that taxpayers need to do their taxes are a W-2 form that comes from employers and a 1099-INT form that comes from the bank. Other important information you want to have with you everyone’s social security numbers and receipts if you have made charitable contributions throughout the year.

Do I need to file taxes if I didn’t make a lot of money?

tax filing questionsIf your income is below the IRS filing requirement ($10,000 for individuals and $20,000 for married couples under 65), it is still recommended that you file taxes. The only way you can get a refund is if you file a tax return.

Therefore, you should file taxes so you can take advantage of refundable tax credits. The average unclaimed tax refund is worth more than $600, and the IRS puts a three-year window on claiming past refunds.

Who can I claim as a dependent?

Many people know they can claim their children as dependents. However, you can also claim elderly parents, significant others and other relatives in some cases. They will have to meet certain requirements, but each dependent can allow you to deduct $3,900, which reduces your tax liability.

What tax deductions and credits are available for parents?

If you have a child, you can take advantage of the dependent exemption, which is worth $3,900 and the additional credits below:

  • Child and dependent care tax credit: For parents who have to pay for childcare. This credit is worth up to $1,050 per child.
  • Earned income tax credit: For low to middle income working Americans. This credit can be as much as $6,044.
  • Child tax credit: For those with big families. This credit can get you up to $1,000 per child under the age of 17.

What tax benefits are available for college students?

Going to college is expensive, which is why the IRS provides some relief options in the form of education tax credits and deductions. This can help you save money on college expenses and some of these include:

  • The American Opportunity Tax Credit: It helps parents and students pay for college with a credit that is worth up to $2,500 per student. It helps with tuition, fees, books, supplies and equipment.
  • Lifetime Learning Credit: You can get up to $2,000 per tax return for college tuition, fees, and supplies paid directly to the institution.
  • Tuition and fees deduction: This allows you to deduct up to $4,000 from your taxable income for your college expenses.

Discover The Benefits of Filing Your Taxes Online

Keep in mind, if you file online with H&R Block or TurboTax they will ask you the correct questions to let you know which deductions you qualify for and guarantee you will receive the largest refund ever.

Their online filing services have the ability to import your W2 information into your tax return so you can avoid worrying about your forms being delivered via snail mail. You can also use their free tax refund calculator to see how much of a refund you can expect.

 

IRS Tax Refund Status and Schedule for 2016

Many people think of the IRS return as a savings account or bonus that they are able to dip into each April. The IRS tax refund schedule also claims to provide refunds within 21 days after returns have been received.

Usually, 21 days is short when you have bills coming in like clockwork, however, when you are waiting on thousands of dollars it can feel like an eternity. Furthermore, Business News Daily revealed that the average tax refund is $2,700, which is more than what 2/3’s of taxpayers bring home each month.

Tracking Your Return & Refund

UPS approximates that their customers track packages an average of 2.42 times per shipment. This means that consumers want to know what is going on with their orders. Like UPS orders, taxpayers also have the ability to track their refunds. The IRS even has a Where’s My Refund” tool to help make doing so easier.

Things You’ll Need

Unlike the UPS, you need more than a tracking number to obtain the details of your tax refund. They want you to provide them with your social security number or EIN, filing status and the refund amount expected.

It has been said that taxpayers who opt to get their refunds deposited in their bank accounts receive their funds faster than waiting on a check. In addition, to speed up the process you want to make sure that your tax return is accurate. If you have questions about the IRS tax refund schedule make sure you consult with a tax professional such as the pros at TurboTax 2017 so there are no delays when you are expecting your tax refund this year.

5 Ways to Increase Your Tax Refund for 2016

Setting up the foundation for a good tax refund takes some basic tax planning, some research and a bit of forethought. Going over your tax situation, talking to your partner when completing your W-4s and capitalizing on many tax credits will help you maximize your tax refund. H&R Block Online will help figure out which credits will get you the largest refund.

Once you begin employment, your employer requests you fill out form W-4. This conveys to your employer the amount of federal income tax to withhold from your salary. The more allowances you apply for on the form, the less income tax is going to be kept back. Then you will have larger paychecks, but a smaller tax refund (or even possibly zero tax refund or a tax charge at year’s end). Things to think about when selecting the amount of allowances you claim include things like:

  • Claiming allowances for you alone, your partner and your eligible children and dependents
  • Taking an allowance for submitting head of household
  • Claiming over $1,500 for child and dependent care charges
  • Working multiple jobs
  • Having a husband or wife who is employed

Claiming fewer allowances on the W-4 means reduced paychecks, given that more tax is going to be withheld. This raises your odds of over-withholding, which results in a larger tax refund. That’s exactly why it’s known as a “refund:” you are actually being paid back what you overpaid to the IRS in the course of the year.

Caroline Thompson, President of Thompson Accounting and Tax, stated that you should be careful because claiming fewer allowances gives the federal government a year of your money tax free.

Make use of a W-4 Withholding Calculator to help calculate which allowances to claim.

Take a look at your filing status

Selecting the filing status that is best suited for your requirements will impact the chance of a rebate. Your filing status establishes:

  • Your usual deduction
  • Your filing needs
  • The credits you will be qualified to be given
  • The amount of tax you have to pay or the tax refund you get

You will find 5 statuses to pick from, however the 3 most popular are: married submitting together, married submitting individually, single, and head of household. TurboTax will help you figure out which option is best for your circumstances.

Claim the earned income tax credit

Working families, individuals, those who are business owners as well as others who have a modest to low-level earnings might be eligible for the earned income tax credit. The EITC reduces the amount of income taxes you owe and you might qualify for a tax rebate. To be eligible, you need to:

Have a legitimate Social Security number

  • Be a U.S. resident, a year-long resident alien or a non-resident alien married to a US citizen or resident alien submitting together
  • Have earnings from self-employment, from an employer or from providing farm labor
  • Not be a claimed dependent or child of someone else
  • Have an eligible child and be between the ages of 25 and 65, residing in the U.S. for a minimum of 6 months

To get the EITC you have to file a tax return, even though you owe no taxes.

Include the dependent care credit

The child and dependent care credit is dependent on a percentage of the sum you paid out for the care of an eligible child or dependent. The overall expenses you possibly can claim are capped at $3,000 for 1 qualified person and $6,000 for 2 or more. If your company provides dependent care benefits, you have to deduct this value. An eligible person is:

  • Your son or daughter is under 13 years of old
  • A dependent that is physically or psychologically not capable of self-care and who resides with you for over 6 months, or
  • Your wife or husband who may be not capable of self-care and resides with you for over 6 months

Additional criteria must be met in order to claim the credit:

  • If you’re married, you have to submit a joint return.
  • You can’t use a caregiver that is your partner or mother or father of the child, your son or daughter under 19 years old or additional dependents.
  • All eligible dependents and children need to have a Social Security number included with your return.
  • You have to provide the name, home address and Social Security number of the caregiver.

The Benefits of Filing Your Taxes with H&R Block Online

We recommend that you file your taxes with H&R Block as it will make the tax season so much easier. When filing they will ask you questions regarding your tax situation and will fill out all the correct tax forms for you. Here is link you can visit to find a discount coupon.

They will let you know which tax deductions and credits are applicable to you so you can keep the maximum amount of your money. You can even use their free tax refund calculator to see how much money you can expect to get back.

Tax Refund Calculator for 2017

It’s almost that time again – time to do your taxes. While some people put it off until the last minute, many want to at least try to gauge what they’ll owe or what their refund might be. Fortunately, you can get an idea of that data by using a tax refund calculator for 2017.

How it works is that it’s online and you simply enter your estimated data. Now while it can’t be entirely accurate down to the penny, you can get an idea of what is going on with your taxes so you don’t get surprised by an amount owed or if you are getting a refund, you can plan for the future.

If you’re like me, you’re impatient and want to know right away – regardless of the outcome. This is the perfect tool for those kind of people or simply those who may have an idea of what they might be expecting but simply want to be sure.

Best of all, it’s free to use so you can go ahead and get an idea of your tax refund or what you might owe, without having to pay.

Providing Good Customer Service to our Clients

Working as an accountant for many years, I have seen so many questions come my way.  People come to me for advice on matters related to money, and they count on me to help them make decisions.  This means that I need to be educated on all sorts of topics, and it makes every day I come to work an interesting one.

During this time of year, I get a lot of questions about income taxes.  Many people are looking at ways to minimize their income tax bills and maximize their refunds.  At this time of year, there is still time left to put money in their IRAs, donate to charity, or take advantage of the many tax write-offs available to both personal and corporate tax clients.  I work together with my clients to save them the most money possible, and I think that they appreciate it.

This year, I have decided to take my customer service to the next level and I have been giving my clients dates as to when they will receive their refunds.  I am basing my advice on information found here: http://filemytaxesonline.org/projected-irs-tax-refund-schedule-dates/

This information has been invaluable to many of my customers, and those of them that base big purchases on their income tax refunds feel a lot better knowing when they will be receiving their money.  It is just one more thing that I can do to provide my customers with better customer service.

Use the Free 2017 Tax Calculator to Find Out Your Tax Refund This Year

With tax season and the end of the year right around the corner many people are hesitant on spending money on Christmas. It could be that they are anticipating a large tax bill coming their way or other maybe simply underestimating what they will get in terms of a tax refund. If this sounds like you then don’t fret.
You can get a quick estimate on your tax refund in just a few clicks of the mouse or taps on the screen for those on a mobile device. Check out the 2017 tax refund calculator and you’ll get a good idea of the amount you’ll get back or if you’ll be paying this year. Although the calculator is only a guide and knowing the exact amount would take longer you can really get an idea of how much your tax refund is going to be.

 

The best part is that using the tax calculator is absolutely free. Just visit the free tax calculator for 2017 and enter some rough estimates and you could be having a much better Christmas. It’s also a great way to plan for upcoming tax payments that you may be required to pay. It will allow you to know beforehand what sort of payment you’ll be required to pay. This can also be a huge benefit if you’re worried about paying your taxes since it gives you a bit of warning before you do your taxes. Check out the tax calculator and know where you stand for your 2015 taxes.

Calculate Your Tax Refund

Having problems calculating your tax refunds? It’s only normal that you do – the process is complicated to make it difficult for people to accurately get it done properly. Luckily for you, there’s a way in which you can calculate your tax refund automatically, with little to no room for error. All you have to do is visit the link above and check out all the details you need to know in order to get started with a piece of software that can accurately calculate your tax refund.

The 2017 Tax Refund Calculator

The tax refund calculator featured on the aforementioned webpage is absolutely free to use, no strings attached and no hidden fees. You can use it even before tax season comes, so you’ll be able to determine just how much money you’ll be getting back. Working in the US means you pay taxes – but in most cases, you end up overpaying. Luckily, you can apply for a tax refund in order to get your money back, and using the tax refund calculator is the best way to determine the approximate amount you’ll be getting at the end of tax season.

So don’t waste time with complicated procedures and lengthy calculations – calculate your tax refund the simple, free and easy way today!

Easy Online Tax Filing With TurboTax

It will soon be time to file your income taxes and if you’re like most people you’re certainly dreading it. Sometimes it seems like there are so many forms and documents that need to be completed that it will take days to complete everything. However, I have recently tried the TurboTax online system and it is simply amazing! At first I had a few concerns because I’m certainly not a tax expert. Actually, I’m not a tax beginner either. I always had someone do my taxes for me mainly because I thought I might make a mistake. So I ended up trying the TurboTax system and all I can say is wow. It’s one of the easiest ways I have found to file your taxes.

Getting started in the TurboTax platform is super easy and it guides you every step of the way. What I really like about it is that it breaks down certain categories of your tax return. You’ll start by entering your main information then move onto income, then deductions. The entire process is streamlined to make it easy and understandable to file your taxes. It’s basically just a series of questions that you’ll need to answer. And the best part is they’re multiple choice. You can also see how things that you enter affect your return since it’s calculated ‘on the fly’ and presented through the entire process. If you’re looking for an easy online tax filing system then be sure to check out TurboTax to do your taxes this year.

Educational Tax Deductions and Credits

The cost of education is always rising. However, if you are someone who wants to grow your knowledge base you will be happy to know that education tax deductions and credits can help education tax deduction credityou with the costs of your education.

One of the tax credits is the American Opportunity Credit and another is the Lifetime Learning Credit. These credits allow you to reduce your tax dollars, dollar for dollar when you claim educational expenses on your federal tax refund.

American Opportunity Credit

This credit allows you to reduce your taxes up to a maximum of $2,500 per student for the educational expenses endured for the first four years. However, students have to attend at least part time and not have been convicted of a felony drug crime.

Various things qualify for this tax credit such as books, equipment, supplies, tuition, and other school related fees. In the event that your taxes are less than $2,500, the refund cut off amount is $1,000. However, those who make more than $80,000 or couples who make more than $160,000 will receive a low credit amount. The phase out limit for the credit is $90,000 in income or $180,000 for couples.

Lifetime Learning Credit

You do not have to be actively pursuing a degree in order to claim this credit. This credit is for anyone who is taking a course to further his or her education. It covers required tuition, equipment, and books. It allows you to claim a maximum amount of $2,000 on each tax return however; if the amount granted is more than your tax bill, you will not receive a credit in the form of a refund.

Additionally, the phase out limit is $63,000 or $127,000 for couples. Those who make more than $53,000 or couples who make more than $107,000 will receive a lower credit amount.

Educational Tax Deduction

Tuition and fees deduction, student loan interest, work related education, scholarships and fellowships can allow you to ease some of your educational financial strains too.

Tuition and Fees Deduction

If you are unable to claim the Lifetime Learning Credit because of the phase out limit, you can claim the Tuition and Fees Deduction of up to $4,000. This is true even for taxpayers who do not itemize their tax returns. As long as you do not make more than $80,000 or $160,000 for couples you are eligible. However, you are unable to claim both a credit and a deduction simultaneously.

Student Loan Interest

Even if you do not itemize your deductions, you can deduct your student loan interest on your taxes. This deduction does not phase out until $2,500 per tax return. However, you must not exceed $60,000 in income or $125,000 if you are married. Furthermore, if you have cash in a US savings bonds to pay for your education the interest is tax-free as long as the cash is used for your education.

Work Related Education

If you are going back to school due to your job, you may be eligible to claim this itemized tax deduction. However, you have to prove that the education was to maintain or improve your work skills or a requirement from your employer. However, this deduction is not for those who have to do it to land a new career.

Scholarships and Fellowships

If you receive a scholarship or a stipend for a fellowship, it is tax-free if you use the funds for tuition, supplies, or other school related expenses. You do have to be a degree candidate though.

Posted by Frank Ellis
Examiner.com, Tax Preparation
Website, http://bestirstaxrefund.com/