2016 Child Tax Credit

This credit is for people who have a qualifying child. It can be claimed in addition to the Credit for Child and Dependent Care expenses.

Ten Facts about the 2016 Child Tax Credit

The Child Tax Credit is an important tax credit that may be worth as much as $1,000 per qualifying child depending upon your income. Here are 10 important facts from the IRS about this credit and how it may benefit your family.

1. Amount – With the Child Tax Credit, you may be able to reduce your federal income tax by up to $1,000 for each qualifying child under the age of 17.

2. Qualification – A qualifying child for this credit is someone who meets the qualifying criteria of six tests: age, relationship, support, dependent, citizenship, and residence.

3. Age Test – To qualify, a child must have been under age 17 – age 16 or younger – at the end of 2010.

4. Relationship Test – To claim a child for purposes of the Child Tax Credit, they must either 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. An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

5. Support Test – In order to claim a child for this credit, the child must not have provided more than half of their own support.

6. Dependent Test – You must claim the child as a dependent on your federal tax return.

7. Citizenship Test – To meet the citizenship test, the child must be a U.S. citizen, U.S. national, or U.S. resident alien.

8. Residence Test – The child must have lived with you for more than half of 2010. There are some exceptions to the residence test, which can be found in IRS Publication 972, Child Tax Credit.

9. Limitations – The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status. For married taxpayers filing a joint return, the phase-out begins at $110,000. For married taxpayers filing a separate return, it begins at $55,000. For all other taxpayers, the phase-out begins at $75,000. In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.

10. Additional Child Tax Credit – If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit.

Links:

• Schedule 8812 (Form 1040A or 1040), Child Tax Credit, and instructions
• Publication 972, Child Tax Credit
• Form 1040A and instructions
• Form 1040 and instructions

How much is the Child Tax Credit for 2016?

2016 Earned Income Credit Income Limits, Maximum Credit Amounts and Tax Law Updates

2016 Earned Income and AGI Limits

Earned income and adjusted gross income (AGI) must each be less than:

Investment Income Limit

Investment income must be $3,400 or less for the year.

Maximum Credit Amounts

The maximum amount of credit for Tax Year 2016 is:

• $6,269 with three or more qualifying children
• $5,572 with two qualifying children
• $3,373 with one qualifying child
• $506 with no qualifying children

For more information on whether a child qualifies you for EITC, see:

• Qualifying Child Rules, or
• Publication 596, Rules If You Have a Qualifying Child.

The American Tax Relief Act of 2012

The American Tax Relief act extended the relief for married taxpayers, the expanded credit for taxpayers with three or more qualifying children and other provisions to December 31, 2017

What is 2016 Earned Income Credit?

Earned income includes all the taxable income and wages you get from working or from certain disability payments.

There are two ways to get earned income:

You work for someone who pays you

or

You own or run a business or farm

Taxable earned income includes:

• Wages, salaries, tips, and other taxable employee pay;
• Union strike benefits;
• Long-term disability benefits received prior to minimum retirement age;
• Net earnings from self-employment if:
  • You own or operate a business or a farm or
  • You are a minister or member of a religious order (see Special Rules page for more information);
  • You are a statutory employee and have income. (See definition of statutory employee on ourHelpful Definitions and Acronyms for EITC page).

Nontaxable Combat Pay election. You can elect to have your nontaxable combat pay included in earned income for EITC. The amount of your nontaxable combat pay should be shown on your Form W-2, in box 12, with code Q. Electing to include nontaxable combat pay in earned income may increase or decrease your EITC. See Publication 3. Armed Forces Tax Guide, for more information.

Examples of Income that are Not Earned Income:

• Pay received for work while an inmate in a penal institution
• Interest and dividends
• Retirement income
• Social security
• Unemployment benefits
• Alimony
• Child support.

2016 Tax Credits and Tax Deductions

There are a variety of credits and deductions for individual and business taxpayers. 2016 Tax Credits and Tax Deductions. Federal Tax Credits. Federal Tax Deductions

Federal 2016 Tax Credit

The Earned Income Tax Credit and the Child and Dependent Care Credit help millions of families every year. There are also a number of credits for small and large businesses. You may have taken deductions when you prepared your annual tax return. In addition to the standard deduction for individuals, common deductions include home mortgage interest, state and local tax, and charitable contributions. Many business expenses are deductible as well.

What is a Tax Credit?

A tax credit diminishes your tax payments. It’s like keeping greater cuts of an apple: the more duty credits you guarantee, the a greater amount of your cash you get the chance to keep (and decline your assessment installments simultaneously!).

There are numerous government salary expense credits that will decrease your taxation rate. Set aside a little time to take in more about these assessment credits now and you may spare hundreds, even a large number of dollars on your Tax Return!

Charge conclusions are like assessment credits. Conclusions can offer you some assistance with reducing your assessable salary, and also expand your duty discount. Take in more about assessment findings.

Distinctive Types of Tax Credits

So as to claim most assessment credits (aside from some retirement commitments) for the present Tax Year, the installments or costs need to happen amid the Tax Year or no later than Dec. 31.

Consideration: Please survey these tax reductions, expense credits, or derivations that could lapse or have terminated.

Tax Credits for Families and Parents

Tax Credits for Homeowners

Tax Credits for Employees/Workers

Medicinal Tax Credits

Tax Credits for Education

Retirement Tax Credits

Environmentally friendly power Energy Tax Credits

Various/Other Tax Credits

Charge pay deductionsTax Credits for Families and Parents

Tyke Tax Credit

The Child Tax Credit is worth up to $1,000 for every qualifying tyke. This duty credit is intended to give assistance to folks qualifying kids. The Child Tax Credit is unique in relation to the Child and Dependent Care Credit.

Take in More about the Child Tax Credit

Kid and Dependent Care Tax Credit

Kid and ward consideration can be exceptionally costly. Be that as it may, there are sure situations where you may guarantee a finding on family-related costs on the off chance that you are currently searching for an occupation. Contingent upon the particulars of the circumstance, you may decrease your assessment by asserting the kid and ward consideration credit on your government wage assessment form for any costs identified with installments made to somebody to watch over a kid under the age 13, a qualifying mate, or a ward.

Take in More about the Dependent Care Tax Credit

Selection Tax Credit

The selection credit is intended to offer folks with the costs some assistance with involving in embracing a qualified tyke. A qualified kid is any tyke under 18 or a tyke with unique needs that does not have the capacity to tend to him or herself.

The most extreme accessible Adoption Tax Credit sum for Tax Year 2015 is $13,400 per qualifying tyke.

Take in More about the Adoption Tax Credit

Charge Information for Parents with Children or Dependents

More data on youngsters duty credits

More expense credits, reasonings for folks with wards, youngsters

Credit for the Elderly and Disabled

You may have the capacity to assume the acknowledgment for the elderly or the handicapped in the event that you are 65 years old or more established, or in the event that you resigned on aggregate and changeless incapacity and have assessable inability salary. To assume the praise, on the other hand, your salary must not surpass certain points of confinement.

Take in More about the Credit for the Elderly or Disabled

Expense form home deductionsTax Credits for Homeowners

Home Energy Tax Credits

There is an expense credit accessible for introducing a renewable-vitality source in your home, for example, sun oriented boards or a geothermal warmth pump. The Residential Energy Efficient Property Credit can be worth up to 30% of your costs.

Take in More about Home Energy Tax Credits

Assessment form work deductionsTax Credits for Employees/Workers

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a credit for citizens who gain low to direct livelihoods. EITC can diminish your expenses, and can mean a discount. Significance additionally working families and people may keep a greater amount of what they work for.

Take in More about the Earned Income Tax Credit

eFile Tax Tip: Use our FREE “EICucator” earned pay assessment credit duty device to discover regardless of whether you qualify to assert the credit on your Tax Return.

Outside Tax Credit

The remote assessment credit was actualized to lessen a twofold taxation rate for natives gaining pay outside of the United States—once by the United States and again by the remote nation where the salary is inferred.

Take in More about the Foreign Tax Credit

assessment related medicinal deductionsMedical Tax Credits

Premium Tax Credit

Singular citizens and families may have the capacity to guarantee the refundable premium assessment credit in the event that they have low to direct earnings and bought medical coverage through the Health Insurance Marketplace at HealthCare.gov. They can have the credit paid ahead of time to their insurance agency so as to diminishing their month to month premium installments or claim the majority of the credit on their assessment form.

Take in More about the Premium Tax Credit

Government form understudy deductionsTax Credits for Education

Understudy Tax Credits

There are two noteworthy duty credits accessible for both new and proceeding with understudies: the American Opportunity Credit and the Lifetime Learning Credit. Every credit offers extraordinary points of interest to understudies however both credits may not be guaranteed by the same understudy around the same time.

Take in More about Education Credits for Students

eFile Tax Tip: Our understudy page has a complete rundown of numerous understudy duty related points. It’s an absolute necessity for any understudy.

Charge derivations for retirement- Retirement Tax Credits

Saver’s Credit – Retirement Savings Contribution Credit

Critical: The sums beneath are for Tax Year 2014. We’ll upgrade them for the 2015 Tax Year when they are accessible.

The Saver’s Credit, previously known as the Retirement Savings Contributions Credit, middles pay families to put something aside for retirement (particularly on the off chance that they add to a retirement arrangement).

For Tax Year 2014, the Saver’s Credit permitted citizens to decrease their pay charge dollar-for-dollar by up to $1,000 ($2,000 for wedded recording mutually). The definite measure of the credit relies on upon their salary, documenting status, and the aggregate sum of their qualified commitments.

Take in More about the Saver’s Credit

charge conclusions for option energyGreen Energy Tax Credits

Half and half/Electric Car Credit

There are two duty credits accessible to people who obtained a vitality proficient auto in 2015:

In the event that you purchased another qualified power device vehicle in 2015, you may be qualified for the Alternative Motor Vehicle Credit.

You may fit the bill for the Tax Credit for Plug-in Electric Drive Motor Vehicles (worth up to $7,500) in the event that you acquired an a few wheeled vehicle. The measure of your credit by and large relies on upon the year the vehicle was made.

Home Energy Tax Credit

In the event that you introduced a renewable-vitality source in your home, for example, little wind turbines a sun based water radiator, you may qualify to guarantee the Residential Energy Efficient Property Credit. This assessment credit can be worth up to 30% of your costs.

The Home Energy Tax Credit is as of now accessible through 2016.

Take in More about Home Energy Tax Credits

assessment related various deductionsMiscellaneous/Other Tax Credits

Assessment Credits for American Citizens Living, Working Abroad

U.S. natives and occupant outsiders from the United States working or living in a remote nation amid the year are permitted the same duty credits as U.S. nationals and inhabitants from the U.S. living in the United States. Look at our nitty gritty synopsis on duty credits for Americans living or working abroa