Child tax credits

[Maegin99]

Can I file with no income? I’m a student and single mom. I am head of the household but had no income this year. I also had a baby this year. I’m curious about being eligible for the child tax credits 

[cucpa1991]

Hello Meagi99,

I encourage you not to only look at the Child Tax Credit but others that I have listed below.  This information can help you understand the complexity of the credits you may be eligible for as a young mother when filing Income Taxes.  Please note that some of the income requirements are adjusted or removed for students:

Child Tax Credit in 2023, 2022, 2020, and earlier tax years:

To claim the Child Tax Credit for 2023, 2022, 2020, and earlier tax years, you must determine if your child is eligible. All of these seven qualifying tests have to be met:

1) Age test - For these tax years, a child must have been under age 17 (i.e., 16 years old or younger) at the end of the tax year for which you claim the credit.

2) Relationship test - The child must be your own child, a stepchild, or a foster child placed with you by a court or authorized agency. An adopted child is always treated as your own child. ("An adopted child" includes a child lawfully placed with you for legal adoption, even if that adoption is not final by the end of the tax year.) You can also claim your brother or sister, stepbrother or stepsister. And you can claim descendants of any of these qualifying people—such as your nieces, nephews and grandchildren—if they meet all the other tests.

3) Support test - To qualify, the child cannot have provided more than half of his or her own financial support during the tax year.

4) Dependent test - You must claim the child as a dependent on your tax return. Bear in mind that in order for you to claim a child as a dependent, your child has to:

• be your child (or adoptive or foster child), sibling, niece, nephew or grandchild;
• be under age 19, or under age 24 and a full-time student for at least five months of the year; or be permanently disabled, regardless of age;
• have lived with you for more than half the year; and
• have provided no more than half of their own support for the year.

5) Citizenship test - The child must be a U.S. citizen, a U.S. national or a U.S. resident alien. (For tax purposes, the term "U.S. national" refers to individuals who were born in American Samoa or in the Commonwealth of the Northern Mariana Islands.)

6) Residence test - The child must have lived with you for more than half of the tax year for which you claim the credit. There are important exceptions, however:

• A child who was born (or died) during the tax year is considered to have lived with you for the entire year.
• Temporary absences by you or the child for special circumstances, such as school, vacation, business, medical care, military services or detention in a juvenile facility, are counted as time the child lived with you.
• There are also some exceptions to the residency test for children of divorced or separated parents. For details, see the instructions for Form 1040.

7) Family income test - The Child Tax Credit is reduced if your modified adjusted gross income (MAGI) is above certain amounts, which are determined by your tax-filing status:

• For tax years 2023, 2022 and 2018 through 2020, the phaseout of the credit begins with $200,000 in income ($400,000 for married filing jointly).
• In 2017, the phase out threshold is $55,000 for married couples filing separately; $75,000 for single, head of household, and qualifying widow or widower filers; and $110,000 for married couples filing jointly. For each $1,000 of income above the threshold, the available child tax credit was reduced by $50.

The Child and Dependent Care Credit:   

Can reduce your tax bill if you paid for a dependent's care so that you could work or look for work.

To qualify for this credit, you must meet all of these criteria:

• You (and your spouse, if filing jointly) must have earned income
  • The earned income requirement for one spouse is waived if they were a full-time student or disabled (if they lived with the other spouse for more than 6 months in 2022)
• You paid caregiving expenses so that you (and your spouse, if filing jointly) could work or look for work
  • The work/look for work requirement for one spouse is waived if they were a full-time student or disabled (if they lived with the other spouse for more than 6 months in 2022)
• You paid a caregiver to care for a Qualifying Person. The caregiver can't be:
  • Your spouse
  • Your dependent
  • Your child if they were under 19 on the last day of 2022, even if not your dependent
  • The parent of the Qualifying Person, if the Qualifying Person is your child under the age of 13 during 2022
• Your filing status is not Married Filing Separately (except under certain circumstances)
• You can provide the care provider's name, address, and their SSN, ITIN, or EIN on your return (unless it's a tax-exempt organization)

The Child and Dependent Care Credit is worth as much as 35% of your qualified expenses, up to $3,000, (for one qualifying person), and $6,000 (for two or more qualifying persons). Your percentage depends on your AGI, with the higher percentages applying to lower incomes and vice-versa.

For example, a married couple supporting two qualifying persons who paid $6,000 in qualified expenses may qualify for up to $2,100 in credits, depending on their AGI. 

Earned Income Credit (EIC):

You can still qualify for the Earned Income Credit (EIC) as long as you have earned income and meet all the other EIC qualifications.

Being unemployed, not working, and/or not meeting the filing threshold doesn't automatically disqualify you from the EIC. However, you must file a return and meet the EIC requirements to get the credit.

TurboTax handles the behind-the-scenes calculations so you don't have to.

As there are many variables needed to answer your questions you will need to see where you fall in the follwing scenarios: 

To qualify for and claim the Earned Income Credit you must:

• Have earned income; and
• Have been a U.S. citizen or resident alien for the entire tax year; and
• Have a valid Social Security number (not an ITIN) for yourself, your spouse (if filing jointly), and any qualifying children on your return; and
• Not have investment income exceeding $10,300; and
• Not be filing a Form 2555 or 2555-EZ; and
• File a return with the Single, Married Filing Jointly, Head of Household, or qualifying surviving spouse filing status, even if you're not required to file a return.

In addition, both your earned income and Adjusted Gross Income (AGI) may not exceed:

• $16,480 if you're not claiming a qualifying child ($22,610 if filing jointly)
• $43,492 if you're claiming 1 qualifying child ($49,622 if filing jointly)
• $49,399 if you're claiming 2 qualifying children ($55,529 if filing jointly)
• $53,057 if you're claiming 3+ qualifying children ($59,187 if filing jointly)

If you're not claiming a qualifying child:

You (and your jointly filing spouse) can't be claimed as a qualifying child or dependent on anyone else's return, and

• You must be at least 18 if you are a qualified former foster youth or a qualified homeless youth, regardless of whether or not you are a specified student
• You must be at least age 19 if you aren't a specified student, qualified former foster youth, or qualified homeless youth
• You must be at least age 24 if you are a specified student, unless you are a qualified former foster youth, or qualified homeless youth
• You must be at least age 25 but under age 65 (at least one spouse must meet the age rule)

When you begin completing a tax return in TurboTax, you will answer interview questions about your particular situation for the year and the software will calculate the results.  Remember, you can allows begin a return and calculate the return for free.  You only pay when you choose to "check out and file" the return.  It may be best that you complete the return up until this point so you can see what you are deductions and credits you eligible for.

Don't forget to enter your Education information as well and see if you can benefit from either the

 American Opportunity Credit  which can provide up to $2,500 in tax credits to cover the tuition, fees and course-related books, supplies and equipment of students in their first four years of college.

or The Lifetime Learning Credit which can cover up to $2,000 of tuition and fees plus any amount for books and supplies you’re required to purchase directly from the school for any year of study, including postgraduate programs.

Again, TurboTax software will assist you as you walk through the interview sections of TurboTax.

Wishing you the best in your family.  Let us know if you have more questions!