Child Tax Credit Instructions - Department Of The Treasury (Page 10 of 16) in pdf

10. Steve and Gretchen did not have any of the credits

Detailed Example

on lines 46, 47, 48, 49, or 50 of Form 1040, so they

enter -0- in the box for line 10.

Steve and Gretchen Leaf have four children who are all

11. They check the “No” box on line 11 because they are

qualifying children for the child tax credit. Steve and

not claiming any of the credits shown on line 11.

Gretchen’s adjusted gross income (AGI) (Form 1040, line

They enter -0- in the box for line 11.

37) is $112,000. This amount represents Steve’s salary

12. They subtract the amount on line 11 ($0) from the

and is considered taxable earned income. They will file a

amount on line 9 ($2,000) and enter the result

joint return. Assume that their tax (Form 1040, line 45) is

($2,000) in the box for line 12.

$2,000.

Steve and Gretchen have the 2004 Form 1040 tax

13. They check the “Yes” box in line 13 since the amount

package and instructions. They want to see if they qualify

on line 8 ($3,900) is more than the amount on line 12

for the child tax credit, so they follow the steps for line 51 in

($2,000). They enter the amount from line 12

the instructions.

($2,000) in the box for line 13. Their child tax credit is

$2,000. They enter $2,000 on line 51 of their Form

Step 1. In Step 1 of those instructions Steve and Gretchen

1040.

determine all four children qualify for the child tax credit.

Steve and Gretchen read the TIP in the worksheet and find

Step 2. The Leafs check the box in column (4) of line 6c on

that they may be able to take the additional child tax credit

Form 1040 for each child.

because they checked the “Yes” box in line 13.

Step 3. In Step 3 the Leafs find out they must use Publica-

Steve and Gretchen complete their Form 1040 through

tion 972 to figure their child tax credit because their AGI is

line 66 and use Form 8812 to see if they can claim the

more than $110,000. When they read Publication 972,

additional child tax credit.

they find out they must complete the Child Tax Credit

Completing Form 8812.

Worksheet that begins on page 4.

Completing the Child Tax Credit Worksheet. Steve and

1. They enter the amount from line 8 of their Child Tax

Gretchen fill out the worksheet (shown here) to find out

Credit Worksheet ($3,900) on line 1.

how much child tax credit they can claim.

2. On line 2, they enter the amount of their child tax

credit ($2,000) from line 51 of their Form 1040.

1. Steve and Gretchen enter the number of qualifying

children (4), multiply 4 by $1,000, and enter the re-

3. Steve and Gretchen subtract the amount on line 2

sult ($4,000) in the box for line 1.

($2,000) from the amount on line 1 ($3,900) and

enter the result ($1,900) on line 3.

2. They enter their AGI ($112,000) in the box for line 2.

4. Before completing line 4, they read the instructions

3. They enter -0- in the box for line 3 since they did not

on the back of the form and answer “No” to each of

exclude any income from Puerto Rico or any income

the four questions. They enter the amount from line 7

on Form 2555, Form 2555-EZ, or Form 4563.

of their Form 1040 ($112,000) on line 4a.

4. They add $112,000 and $0 and enter the result

5. Since the amount on line 4a ($112,000) is more than

($112,000) in the box for line 4.

$10,750, they check the “Yes” box and subtract

5. They enter $110,000 in the box for line 5 since they

$10,750 from the amount on line 4a ($112,000) and

will file a joint return.

enter the result ($101,250) on line 5.

6. They check the “Yes” box in line 6 since the amount

6. They multiply the amount on line 5 ($101,250) by

on line 4 ($112,000) is more than the amount on line

15% (.15) and enter the result ($15,188) on line 6.

5 ($110,000). They subtract line 5 ($110,000) from

Next, they are asked if they have three or more

line 4 ($112,000) and enter the result ($2,000) in the

qualifying children. Steve and Gretchen check the

box for line 6.

“Yes” box. Since line 6 ($15,188) is more than line 3

($1,900), they skip Part II and enter the amount from

7. They multiply the amount on line 6 ($2,000) by 5%

line 3 ($1,900) on line 13. This $1,900 is their addi-

(.05) and enter the result ($100) in the box for line 7.

tional child tax credit. They also enter this amount on

8. They check the “Yes” box in line 8 since the amount

line 67 of their Form 1040.

on line 1 ($4,000) is more than the amount on line 7

Steve and Gretchen will get a child tax credit of $2,000 and

($100). They subtract line 7 ($100) from line 1

an additional child tax credit of $1,900 for the year.

($4,000) and enter the result ($3,900) in the box for

line 8.

9. They enter the amount from line 45 of their Form

1040 ($2,000) in the box for line 9.

Page 10

Child Tax Credit Instructions - Department Of The Treasury Page 10

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