What is the Benefit of Filing Married Vs. Separate for the Child Tax Credit?

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The nonrefundable Child Tax Credit offers families a $1,000 tax credit for each eligible child in the household. Its counterpart, the refundable Additional Child Tax Credit, provides refunds to families with eligible children and zero tax liability. While these credits seem simple, income limits decrease the amount of both credits; because limits are higher for couples filing jointly, you receive a larger credit when you file jointly. The possibility of receiving a refund check also increases when you file jointly.

Definition

Depending on your income, each eligible child is worth a $1,000 tax credit. If you are divorced, separated or filing separately, only the parent listing the children as dependents receives the credit. Married parents filing separately cannot divide the credit equally. In addition, the credit reaches the income limit sooner when parents file separately.

Eligibility and Income Limits

To qualify, children must be under 17 years old and be either a U.S. citizen, a U.S. national or a U.S. resident. Parents with two eligible children receive a $2,000 tax credit. However, the credit decreases by $50 for every $1,000 above certain income limits. The limit when parents file jointly is $110,000. The limit is only $55,000 when parents file separately. For example, if you have one eligible child and your net income is $75,000, you would receive the full credit if you filed jointly, but you would receive no credit if you filed separately.

Additional Child Tax Credit

The Additional Child Tax Credit is the refundable counterpart to the Child Tax Credit. Refundable tax credits apply toward a tax refund check from the government; nonrefundable tax credits do not. If you have zero tax liability, more than $3,000 in earned income and three or more eligible children, you are eligible for the refundable Additional Child Tax Credit. The amount of your refund is equal to 15 percent of your earned income above $3,000. If you file jointly, your earned income is higher, so you receive a larger refund.

Carrying Over

The nonrefundable Child Tax Credit does not carry over into following tax years. If you had two eligible children and did not reach the income limit, your $2,000 tax credit applies only to your taxes for that year. A $1,600 tax liability would be reduced to zero, but the extra $400 would simply disappear. However, the zero tax liability would make you eligible for the refundable Additional Child Tax Credit. Taxpayers filing jointly again have the advantage, because their higher income limit increases their nonrefundable credit, while their higher overall income increases their refundable credit.

References

About the Author

Sean Mullin has been creating online content since 2007. He also worked in an online writing center for college students. In addition to writing, Sean has a Master of Arts in classics and teaches Greek and Latin part-time at the college level.

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