What is the child tax credit?

Question

I am having my first baby and my friend told me that my husband and I will qualify for the the child tax credit.

What is the $1,000 child tax credit?

Is this money that we don't have to pay taxes on? Or is the $1,000 credit taxen off our taxable income?

I don't understand how this will benefit me.

Answer 1

If baby was born in 06, you will get the credit when you file this year, if baby is born in 07 you will get the credit next year when you file. It is a credit taken off of your taxable income.

Answer 2

The child tax credit reduces your tax liablity.
If you owe $600 in tax and you qualify for the credit, your tax liability should be reduced to $0. Thus, you will receive all of your federal taxes that were paid in. Plus, you may receive an additional child tax credit and the EIC.

Answer 3

www. irs.gov

They have all the forms and instructions.

A credit is the amount of money that is added to your amount you receive back in an income tax - returned from overwithholding to you. If you owe, it's the amount that is subtracted from the amount you owe.

It is a great benefit as is the earned income tax credit if you qualify.
GOD bless.

Answer 4

Taxpayers who have one or more qualifying children may be entitled to a child tax credit of $1,000 per child, subject to a pahseout limitation which begins when modified adjust gross income (AGI) exceeds $110,000 for married individuals filing jointly, $55,000 for married individuals filing seperately, and $ 75,000 for unmarried individuals.

Answer 5

I am pretty sure it is a tax credit to the taxes you owe. It shows up on the 1040 as a deduction from the taxes you owe. Here are the details and a form to figure it out.
http://www.irs.gov/pub/irs-pdf/p972.pdf