Federal Child Tax Credit Information

Have you ever wondered if the federal child tax credit was always available? If not when did it start? With what amounts?


Here you will find this and other information on child tax credit.

The federal child tax credit was created by the Taxpayer Relief Act of 1997. The credit was for $400- per child in 1998 and increased to $500- in 1999. The great part of this credit is that instead of just lowering your taxable income it reduces your tax dollar-for-dollar.

Families, with more than three children that were unable to use the whole child tax credit because their tax was too low, were able to claim the additional child tax credit. It allowed a refundable credit (even if they did not owe any taxes) up to the amount of the social security taxes paid.

In 2001 with the Bush tax cuts, called Economic Growth and Tax Relief Reconciliation Act of 2001, the child tax credit was increased to $600-. The additional child tax credit was made available to everybody. This credit was 10% of the income above $10,000- up to the unused portion of the child tax credit.

In 2003 with The Jobs and Growth Tax Relief Reconciliation Act of 2003 the child tax credit was raised to $1,000-. This additional $400- for year 2003 was given as a prepayment called Advance Child Tax Credit Payment and was given in July and August 2003 instead of in 2004 on the 2003 tax return.

After 2004 the full thousand dollars is given as child tax credit on the tax return.

Through the years the additional child tax credit was also extended and now it offers 15% of the income above $3,000-.

What is the future of the federal child tax credit?

The Bush tax cuts are scheduled to expire at the end of 2012. If it does, everything will revert to what was available in 2001. This means a child tax credit of $500- per child and a reduced additional child tax credit which is only available for families with three or more children.

Of course the cuts or at least part of it might be extended, so we don't really know what to expect. But one thing is sure, the upcoming 2012 tax season which starts in January 2013 will not be affected.

State child tax credit

Not only the IRS offers a child tax credit now, some states also offer a child credit. In New York State it's called the Empire State Child Tax Credit and offers between $100- and $330- for children between age four and seventeen.


Updated December 24, 2012


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