1040A Child Tax Credit Tips

Video Transcript

I'm going to talk now about child tax credit and this may require form 8901. And if you look at our example I'm showing $2,000 on this completed form, and I'll talk to you about how we got to that amount in just a minute. But if you go to instructions for line 32, there's several steps you need to take to determine the credit. First is to make sure that you have a qualifying child for the child tax credit. And qualifying child is defined as either a child who is your son, daughter, stepchild, foster child, brother, sister, stepbrother or sister, or descendant of any of them. So grandchildren could (are) qualified for this. They have to be under the age of 17 at the end of 2007, they must not provide over half of their own support in 2007, and they must live with you for more than half of the year. And they must be a U.S. citizen, a U.S. national, or a resident of the United States. So if this, once you've determined that you do have a qualifying child, you must look at your adjusted gross income from line 22. And, depending on your filing status, 110,000 for married filing jointly or 75,000 for single, head of household, or qualifying widower. Married filing separately is 55,000. If you answer yes to any of these questions you must use form Publication 972, but know you continue down to the next question which is: Are you claiming the retirement savings contribution credit? And if the answer's no, you can figure your child tax credit. And this is the child tax credit worksheet. And in our example I'm saying we have two qualifying children and I multiply that by $1,000 and I come up with $2,000. Then the amount from form 1040A line 28 is 12,166. The next section we add the amounts from lines 29, 30, and 31 from 1040A and in this case, these are all zeros so the total is zero. So, are the amounts on line 2 and 3 the same? They're not, line 2 is much more. So I check 'no', and then I subtract line 3 from line 2 and I get 12,166. Is the amount on line 1 more than the amount on line 4? Line 1 is $2,000, line 4 is 12,166 so my answer is no. And enter the amount from line 1 which is $2,000 and this is the amount that I enter on form 1040A line 32. And you can see line 32 is $2,000.

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