How to Calculate the Family Tax Credit

Written by andrea helaine
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How to Calculate the Family Tax Credit
You can receive a refund from the IRS if you qualify for the family tax credit. (tax forms image by Chad McDermott from Fotolia.com)

If you have low to moderate earned income, you can use the family tax credit, officially known as the Earned Income Tax Credit, to receive a refund from the Internal Revenue Service. While a tax deduction reduces the income that the IRS uses to determine the amount of your taxes, a tax credit takes the amount off the tax bill. In order to receive the family tax credit for a qualifying child, the taxpayer must report the child's Social Security number.

Skill level:
Easy

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Instructions

  1. 1

    Your child qualifies for the family tax credit if, at the end of the filing year, she was a U.S. citizen who lived with you in the United States for more than half of the tax year and was younger than 19, younger than 24 and a full-time student, or any age if permanently and totally disabled. Make sure that children you want to qualify have Social Security numbers.

  2. 2

    Determine how you will file your taxes. You must choose either "married filing jointly" or "single" status to obtain this credit. You may not choose "married filing separately."

  3. 3

    Calculate your family's income for the tax year in question. Make sure that the amount you earned during the tax year is less than the earned income maximum. For the 2010 tax year, earned income and adjusted gross income both need to be less than £29,492 if you are married and filing jointly with two qualifying children.

  4. 4

    Make sure that the amount of investment income for your family is less than £2,015 for the tax year.

  5. 5

    To figure the amount of your family tax credit, determine the number of qualifying children in the household. The maximum tax credit is £297 if you have no qualifying children, £1,982 with one qualifying child, £3,273 with two qualifying children and £3,682 with three or more children who qualify.

Tips and warnings

  • You do not qualify for the tax credit if you did not live in the United States all year.

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