$1000.00 child care credit question.?

Question

Does this credit basically give you an extra thousand dollars in your tax return? I paid my ex $600.00 2 years ago in taxes for our son. Now this year he is saying I owe him $1600.00. Can anyone out there please help in this. Also, he makes too much for EIC.

Answer 1

It sounds like your ex is letting you claim your child on your tax return. You used to pay him $600, but he now wants $1,600 because of the Child TAX Credit (not child CARE credit). Correct?

The Child Tax Credit (CTC) lowers your taxes by $1,000. If you don't have at least $1,000 in tax liability, then the CTC is whatever your tax liability is. [ ex. if your liability is $950, your CTC is $950...if you liability is $1,050, then your CTC is $1,000. It can be as high as $1,000 per child, but it is less if you don't have $1,000 per child in tax liability ]

If you don't have enough tax liability to cover the CTC, you sometimes can get the remainder in the form of Additional Child Tax Credit (ACTC). In the previous example, if your liability is $950, then the CTC would lower your liability to $0, and the ACTC would increase your refund by $50. The two of them together would give you $1,000 less taxes ($1,000 more refund).

The qualifications for ACTC are complex, but in general, you need an income over $11,300 to qualify. Most people in the $20,000 to $60,000 range get $1,000 per child through the use of CTC and ACTC. This is a generalization...only by doing your tax return can one know for sure.

There is something else called a Child Care Credit (its real name is "Child and Dependent Care Credit") which partially refunds you for whatever you pay for day care. Since you mentioned $1,000, I assumed you meant the Child Tax Credit instead.

Answer 2

Can you add some details. Why are you paying him?

The Child Tax Credit used to be $600, it is now $1,000. Depending on your income, this credit may be worth nothing, or it can in fact increase your refund by $1,000.

The Earned Income Credit is only for a parent with a child in their home.

Instead of one parent paying the other for the Child Tax Credit, the custodial parent can sign over the dependency exemption plus the child tax credit to the noncustodial parent, using Form 8332:

http://www.irs.gov/pub/irs-pdf/f8332.pdf

Maybe that would help you. If your income qualifies, and you are the custodial parent, you can still get the Earned Income Credit for your child even if the other parent gets the Child Tax Credit and dependency exemption.

Answer 3

Yes, the child care credit gives you $1000 extra in taxes if you owe that much. If you owe less, it wipes out your tax but doesn't give you the rest back.

I don't understand what you are saying about paying your ex in taxes for your son though.

Answer 4

Ask your attorney about this matter.