- Child Tax Credit
Earned Income Credits
Education Credits Forms: 1098-T and 1098-E
America Opportunity and Lifetime Learning Credit
CHILD TAX CREDITS
Qualifying Child for the CTC A child qualifies you for the CTC if the child meets all of the following conditions.
- The child is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew).
- The child was under age 17 at the end of 2020.
- The child didn’t provide over half of his or her own support for 2020.
- The child lived with you for more than half of 2020.
- The child is claimed as a dependent on your return.
- The child doesn’t file a joint return for the year (or files it only to claim a refund of withheld income tax or estimated tax paid).
- The child was a U.S. citizen, U.S. national, or U.S. resident alien.
Your Child must have the required SSN. The required SSN is one that is valid for employment and that is issued by the Social Security Administration before the due date of your 2020 return.
Timely Issued TIN In addition to being a qualifying person for the ODC, the person must have an SSN, ITIN, or ATIN issued to the dependent on or before the due date of your 2020 return (including extensions). If the person has not been issued an SSN, ITIN, or ATIN by that date, you can’t use the person to claim the ODC.
Qualifying Person for the ODC A person qualifies you for the ODC if the person meets all of the following conditions:
- The person is claimed as a dependent on your return.
- The person can’t be used by you to claim the CTC or ACTC.
- The person was a U.S. citizen, U.S. national, or U.S. resident alien.
The maximum amount you can claim for the credit is $2,000 for each child who qualifies you for the CTC.
Additional Child Tax Credit (ACTC) This credit is for certain individuals who get less than the full amount of the CTC. The ACTC may give you a refund even if you don't owe any tax.
Foreign earned income. If you file Form 2555 (relating to foreign earned income), you can’t claim the ACTC.
The Child Tax Credit (CTC) can highly benefit your family by allowing you to receive up to $2,000 per qualifying child depending on your income.
A qualifying child must:
- be under the age of 17 at the end of the year 2020
- be a son, daughter, adopted child, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, or descendent of any of those
- be a U.S. citizen or resident alien
- have lived with you for over half of the year 2020
- be your claimed dependent for the tax year
- have not provided over half of their own support during the year 2020
There are adjusted gross income (AGI) limits for taxpayers claiming the Child Tax Credit, which for 2020 are:
- Your modified adjusted gross income (AGI) is more than the amount shown below for your filing status.
- a. Married filing jointly—$400,000.
- b. All other filing statuses—$200,000.
IMPORTANT: Only one person can claim the same child. If a child qualifies for more than one person and one of the persons is a parent or parents, the non-parent can claim the child only if their AGI is higher than the parent(s). If the child qualifies another relative and the parent AGI rules do not apply, the taxpayers choose. If more than one .
ERNING INCOME CREDIT (EITC) 2020.
Find the maximum AGI, investment income and credit amounts for tax year 2021
Children or Relatives Claimed
Investment income limit: $3,650 or less: The maximum amount of credit you can claim
- No qualifying children: $543
- 1 qualifying child: $3,618
- 2 qualifying children: $5,980
- 3 or more qualifying children: $6,728
Basic Qualifying Rules:
To qualify for the EITC, you must:
- Show proof of earned income
- Have investment income below $3,650 in the tax year you claim the credit
- Have a valid Social Security number
- Claim a certain filing status.
- Be a U.S. citizen or a resident alien all year.
You may claim the Earned Income Tax Credit (EITC) for a child if you meet the rules for a qualifying child.
To qualify for the EITC, a qualifying child must:
- Have a valid Social Security Number
- Meet all 4 tests for a qualifying child
- Not be claimed by more than one person as a qualifying child.
Disability Benefits and Earned Income Rules:
If you get disability payments, your payments may qualify as earned income when you claim the Earned Income Tax Credit (EITC).
Disability payments qualify as earned income depending on:
- The type of disability payments you get:
- Disability retirement benefits
- Disability insurance payments
- Other Disability benefits
- Your age when you start to get the disability payments
Filing Status: To qualify for the EITC, you must file your tax return using one of the following statuses:
To claim a “child” for the EITC – and therefore be eligible for a larger credit – you must have a certain relationship with the child. The child must be your:
- Son or daughter
- Legally adopted child
- Foster child
- Sibling – step, half or whole
- A descendant of any of the above
Additional Child Tax Credit Year: 2020
If the amount of your Child Tax Credit is greater than the amount of income tax that you owe, you may be able to claim the Additional Child Tax Credit. The Additional Child Tax Credit (ACTC) on Schedule 8812 is refundable.
- Taxpayer Identification Number Requirements Each qualifying child must have the required social security number (SSN).
- If you have a qualifying child who does not have the required SSN, you cannot use the child to claim the ACTC on either your original or an amended 2020 return.
The required SSN is one that is valid for employment and is issued before the due date of your 2020 return. (including extensions).
- You must have a taxpayer identification number by the due date of your return.
If you, or your spouse if filing jointly, do not have an SSN or IRS individual taxpayer identification number (ITIN) issued on or before the due date of your 2020 return (including extensions), you cannot claim the ACTC on either your original or an amended 2020 return.
- If you apply for an ITIN on or before the due date of your 2020 return (including extensions) and the IRS issues you an ITIN as a result of the application, the IRS will consider your ITIN as issued on or before the due date of your return.
An education credit helps with the cost of higher education by reducing the amount of tax owed on your tax return. If the credit reduces your tax to less than zero, you may get a refund. There are two education credits available: the American Opportunity Tax Credit and the Lifetime Learning Credit.
The American Opportunity Tax Credit modifies the existing Hope Credit. The AOTC makes the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.
- You, your dependent or a third party pays qualified education expenses for higher education.
- An eligible student must be enrolled at an eligible educational institution.
- The eligible student is yourself, your spouse or a dependent you list on your tax return.
American Opportunity Tax Credit:?
To be eligible for AOTC, the student must:
- Be pursuing a degree or other recognized education credential
- Be enrolled at least half time for at least one academic period* beginning in the tax year
- Not have finished the first four years of higher education at the beginning of the tax year
- Not have claimed the AOTC or the former Hope credit for more than four tax years
- Not have a felony drug conviction at the end of the tax year
Academic Period can be semesters, trimesters, quarters or any other period of study such as a summer school session. The schools determine the academic periods. For schools that use clock or credit hours and do not have academic terms, the payment period may be treated as an academic period.
Lifetime Learning Credit.
Who can claim the LLC?
To claim the LLC, you must meet all three of the following:
- You, your dependent or a third party pay qualified education expenses for higher education.
- You, your dependent or a third party pay the education expenses for an eligible student enrolled at an eligible educational institution.
- The eligible student is yourself, your spouse or a dependent you listed on your tax return.
ed before the due date for your tax return, in order to claim the AOTC.