child care tax credit 2010, american income life
By admin at 25 January, 2010, 2:18 pm
child care tax credit 2010, american income life
American Opportunity Tax Credit
The American Opportunity Tax Credit provides up to $2,500 for people pursuing undergraduate education. Replacing and expanding on former the Hope credit, the American Opportunity credit is scheduled to be effective for the years 2009 and 2010 only.
How Much You Get
In most cases, the child tax credit is limited to the amount of tax liability on your return (in other words, if your credit is bigger than your tax liability, your tax liability is just reduced to zero, and the rest of the credit is lost).
In certain cases, though, you can get a child tax credit refund when the credit exceeds your tax liability. This means that you would get a refund of the difference between your tax credit and what you owe in taxes. This refundable child tax credit is called the Additional Child Tax Credit, which you calculate on Form 8812.
This credit is refundable for families with three or less qualifying children, to the extent of 15 percent of taxable earned income in excess of $11,000 for 2005. For families with four or more qualifying children, the refundable amount may be the excess of the family’s social security tax over the earned income credit, or the extent of 15 percent of taxable earned income in excess of $11,000, whichever is greater.
Herb and Susan had a bad year, making only $25,000 on their sheep ranch. They have four children under 17. Their taxable income was zero, so they owed zero in taxes, but they got an additional child tax credit refund worth $1,835, or the excess of the family’s social security tax over the earned income credit, whichever is greater.
The otherwise allowable child tax credit is phased out for taxpayers with modified adjusted gross income (defined below) above certain thresholds. The amount of the credit is reduced (but not below zero) by $50 for each $1,000 (or fraction thereof) by which the taxpayer’s modified adjusted gross income exceeds the threshold amount. The threshold amount is:
- $110,000 in the case of a joint return
- $75,000 in the case of an unmarried individual
- $55,000 in the case of a married individual filing a separate return
The total you can take is $1,000 per child, although part of that can be a tax credit, and the rest in a refund. Families with three or more children can calculate the refundable credit as they did last year if it results in a larger amount.
If you pay the Alternative Minimum Tax, you can use the child tax credit to offset that.
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