Child Tax Credit
Parents may claim a $2,000 credit against federal income tax for each child under age 17. The credit is phased out starting from $400,000 of adjusted gross income for married joint filers and ($200,000 for single filers).
The child credit is partly refundable; the refundable portion is referred to as the "additional child tax credit." You receive a refundable credit if your Child Tax Credit is greater than the total amount of income taxes you owe, as long as you had an earned income of at least $2,500.
Earned Income Tax Credit
The Earned Income Tax Credit (EIC or EITC) is a refundable tax credit for low- and moderate-income workers. The amount depends on income and number of children. People without kids can qualify. For 2020, the earned income credit ranges from $538 to $6,660.
Here are some quick facts about the Earned Income Tax Credit (EITC or EIC):• For the 2020 tax year, the earned income credit ranges from $538 to $6,660 depending on your filing status and how many children you have.• You don't have to have a child in order to claim the earned income credit.• The earned income tax credit doesn't just cut the amount of tax you owe — the EIC could also score you a refund, and in some cases a refund that's more than what you actually paid in taxes.
2020 Earned Income Tax Credit
(for taxes due in April 2021)
2019 Earned Income Tax Credit
Both your earned income and your adjusted gross income each have to be below the levels in the table. In general, the less you earn, the larger the earned income credit.
Your earned income usually includes job wages, salary, tips and other taxable pay you get from your employer. Your adjusted gross income is your earned income minus certain deductions.
Child and Dependent Care Tax Credit
The percentage of allowable expenses decreases for higher-income earners — and therefore the value of the credit also decreases — but it never disappears completely.
This credit is not refundable, which means it can reduce your tax bill to zero but you won't get a refund on anything left over from the credit.
Some states also offer their own versions of this credit for childcare and dependent care. They are often simply a percentage of the federal credit, but your state could expand eligibility, adjust the income thresholds or provide other incentives.
How to qualify for the Child and Dependent Care Tax Credit
• A dependent child must be 12 or younger at the time the childcare is provided.• Spouses and other dependents don’t have an age requirement, but IRS rules say they must have been physically or mentally incapable of self-care and must have lived with you for more than half the year.• If you’re married, you must file as married filing jointly.• You must have earned income — money you earned from a job. Investment or dividend income doesn’t count.• You must provide the care provider’s name, address and Taxpayer Identification Number — either a Social Security number or an Employer Identification Number.
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