Child Tax Credit

Child Tax Credit is a payment to support families with children. You can claim Child Tax Credit if you are responsible for one child (or young person)or more. Child Tax Credit is a payment for people with children, whether they are in or out of work. You can get Child Tax Credit if your income is low enough and you are responsible for at least one child.

Millions of families became eligible last year even if they owed no taxes. The additional tax credit comes as a refund from the IRS. Millions who paid into the federal till each year before 2001 now get every dollar back that the federal government withheld from their paychecks during the year, and then some. This trend is well documented but frequently ignored by critics of the tax cuts.

Families that meet eligibility criteria can receive both credits. The CTC and other tax credits do not count as income in determining eligibility for benefits such as W-2, Medicaid, Food Stamps, Supplemental Social Security (SSI) or public or subsidized housing. Families that are “newly eligible” are those with incomes between $8,500 and $12,050. A broader group of low-income families will see their credit increase as a result of this provision, because the size of their credit is based on the amount by which the family’s earnings exceed the threshold. Families must currently meet an income threshold of $11,750 in order to be eligible for the refundable child tax credit.

Families on incomes of up to $58,000 a year (or $66,000 a year if there is at least one child who is less than a year old) can benefit from the new CTC whether or not they are working. This money acknowledges and supports the cost of bringing up children. Families may be able to get all or part of any remaining CTC as a refund through the Additional Child Tax Credit (the refundable CTC). Families with earnings over $10,000 could receive at least a partial credit in excess of their tax liability. The refundable portion of the credit increased with earnings.

Families of 2.9 million children whose parents earn between $8,500 and $12,050 will be newly eligible for the credit, and the families of 10.1 million children will receive a higher credit than they otherwise would have. For example, a single mother earning the minimum wage, working 40 hours a week for 50 weeks a year will earn $12,260 in 2008.

Congress quickly realized they left themselves open to political attack, and scrambled to pass an unnecessary bill. The Senate hastily voted 94-2 on June 5th to expand the child tax credit provision for low-income working families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. The Earned Income Tax Credit was responsible for significant declines in poverty and economic gains during the 1990s, but it can still be strengthened to improve its effectiveness.

Congress is currently considering the American Recovery and Reinvestment Act, intended to kick start the ailing economy. This version of the bill passed by the U.S. Government.


Persons with at least one qualifying child who file federal tax returns can get a CTC of up to $1,000 for each child under 17 years old. To qualify for the CTC, the tax filer’s earned income must be above a certain threshold ($3,000 in 2009). Persons on active military duty are considered to be living within the United States. Temporary absences, for either you or the child, due to school, hospital stays, business trips, vacations, periods of military service, or jail or detention counts as time lived at home.

EITC and the Child Tax Credit help families make ends meet during tough economic times, improve children's well-being, and benefit our economy and communities. EITC is a federal refundable tax credit. Your employer can add EITC right into your paycheck, or you can receive a lump sum after you file your taxes each April.

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