Tag: phase out

Claiming the Child Tax Credit

Claiming the Child Tax Credit for 2009

The Child Tax Credit is an important and beneficial tax credit that you should file for whenever you are eligible. You can receive a tax credit for up to $1,000 for every child that qualifies. Children must be under the age of 17 in addition to other stipulations.

The qualifications for a child include age, relationship, support, dependent, citizen, and residence. The first test we have already mentioned, the child has to be younger than 17 when the tax season ends. To pass the relationship test, the child has to be your child, your step-child, your sibling, your step-sibling, adopted, a foster child or a child of one of these.

You have to claim the individual as your dependent when you file and they must be financially dependent upon you. US citizens, nationals, and resident aliens are the only groups to pass the citizenship test to claim the Child Tax Credit. And they must live with for the majority of the year.

Like many tax credits, this one phases out for income earners. The phase-out begins at $110,000 adjusted gross income when filing jointly with your spouse and $55,000 when filing separately. Other filing statuses phase out beginning at $75,000. Finally, if you are eligible for more tax credit than you have paid in, file for the Additional Child Tax Credit.

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Pay For College With Tax Credits

Pay For College With Tax Credits

When the American Recovery and Reinvestment Act (ARRA) was passed in 2009,early in the Obama administration’s tenure, it expanded the popular Hope tax credit for students attending college. This tax credit was designed to help offset college tuition expenses as well as other college related expenses.

Tuition and fees are the main areas that you may claim the credit for. Higher education purchased in 2009 or 2010, primarily, at any level of tradition college, years one through four. The credit is now called the American Opportunity credit and has increased by $700 to $2,500.

The other qualified expenses covered include books, supplies, and equipment. Anything that is required for the classes that you or your student are taking. A new laptop would be a nice way to spend the tax credit. To get the full amount of the $2,500 tax credit, a student needs to spend $4,000 on higher education during the year as the 2nd $2,000 is paid out at 25% of the expense.

There is a phase out if you earn over $80,000 or you and your spouse earn over $160,000, but $1,000 of the $2,500 is refundable beyond any tax that you might owe. IRS Form 8863 is the form you should complete when you prepare your taxes to claim the American Opportunity credit this year.