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If you have children, you know what a blessing they can be, especially during tax time. If you have dependent children, you may be able to claim a child tax credit of up to $1,000 per qualifying child for 2012.
A qualifying child must be under age 17 as of the end of 2012 and be either a U.S. citizen or resident alien. A qualifying child also must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your grandchild, niece, or nephew); have lived with you for more than one-half of 2012; not have provided over half of his or her support; and must be claimed as a dependent on your income tax return. "Adopted child" includes a child placed with you for adoption even if the adoption has not been finalized. A foster child must have lived with you the entire year to qualify, unless the child was born or died during the year.
Like most of the tax credits and other breaks that have been enacted lately, there is an income limitation on the people who can claim this credit. The phaseout of the credit begins at modified adjusted gross income (AGI) of $110,000 for joint filers, $75,000 for singles and heads of household, and $55,000 for marrieds filing separately. You will lose $50 of your total child credit for each $1,000 (or fraction of $1,000) of your modified AGI that exceeds the applicable threshold. For this purpose, modified AGI includes the amount shown on Line 37 of Form 1040 or Line 21 of Form 1040A, plus any foreign earned income exclusion, foreign housing exclusion, and income from U.S. possessions, if any.