Families who haven't filed their taxes should not forget about the Child Tax Credit, which lets taxpayers reduce their federal income tax by up to $1,000 for each qualifying child, according to the Internal Revenue Service.
For a parent to be able to claim a child for the tax credit, the child must meet the criteria in seven areas: age, relationship, support, dependent, joint return, citizenship and residence.
Children claimed must have been age 16 or younger at the end of 2011.
The relationship test examines the relationship between the person claiming the child and the child. "To claim a chid for the purposes of the Child Tax Credit, the child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of these individuals, which includes your grandchild, niece or nephew," the IRS said in a statement. Adopted children—including those lawfully placed with a family for legal adoption—are always treated as their adoptive parents' own children.
Also, a child must not have provided more than half of his or her own support in the family, and he or she must be claimed as a dependent on the federal tax return of the person who claims the Child Tax Credit.
If the child files a joint return for 2011, he or she can only file the return as a claim for a refund, according to the IRS.
The child must also be a U.S. citizen, and must have lived with the person claiming him or her for more than half of 2011. Exceptions to the residence test can be found in IRS Publication 972 (Child Tax Credit).
The Child Tax Credit is phased out at $110,000 modified adjusted gross income for married taxpayers filing a joint return, $55,000 for married taxpayers filing separately, and $75,000 for all other taxpayers.
Additionally, the Child Tax Credit can be limited by the amount of the income tax and any alternative minimum tax owed, according to the IRS.
For more information, see IRS Publication 972 (Child Tax Credit).