The Child Tax Credit
The child tax credit is a federal tax credit worth up to $1,000 in 2003 for each child under age 17 claimed as a dependent on the worker’s tax return. While the CTC has been in effect since 1998, Congress made changes to the credit in 2001 that made it available to millions more low- and moderate-income working families and provided many families a larger CTC than they could have received in the past. This “Additional CTC” is refundable, meaning some families can get the credit even if they owe no income tax.
Which Children Qualify for the Tax Credit
A child claimed for the CTC must be under age 17 at the end of 2003 and must be claimed as a dependent on the worker’s tax return. The child must be either a citizen or be a resident alien who lives in the United States. “Qualifying children” include sons, daughters, stepchildren, grandchildren, and adopted children. They may also be brothers, sisters, stepbrothers or stepsisters—as well as descendants of such relatives. Foster children can be claimed if they lived with the worker for the entire year (and are claimed as dependents), but only if they are placed with the worker by an authorized government or private placement agency.
Who Can Claim the Additional Child Tax Credit Refund?
To be eligible for the CTC refund, a single or married worker must
- Be able to claim and exemption for a dependent child under age 17 on his or her tax return
- Have taxable earned income above $10,500
- Have either a Social Security Number or an Individual Taxpayer Identification Number
Can a Working Family Get Both the Child Tax Credit Refund and the Earned Income Tax?
YES!! Most low wage working families that qualify for the CTC refund will also be eligible for the EITC. For many families that qualify for both credits, the EITC will be larger, but the CTC will still provide a significant income boost.
Despite the overlap in eligible families, there are important differences in the eligibility rules for the two credits and the procedures for claiming them. In addition, some working families that qualify for the CTC but do not qualify for the EITC. For example, a non-custodial father who can claim his child as a dependent can get the CTC, but he cannot claim the EITC because his child does not live with him.
Can Immigrant Workers Claim the Child Tax Credit?
Immigrant workers must have either a Social Security Number of an Individual Taxpayer Identification Number (ITIN) in order to claim the CTC. Although workers with a dependent in Mexico or Canada can obtain ITIN’s in order to claim exemption for the dependent on their tax return, a dependent child claimed for the CTC must be either a U.S. citizen or be a legal resident alien who lives in the U.S. The child does not have to live in the worker’s home.