Schedule 8812 is important to claim the Child Tax Credit. Child Tax Credit helps numerous families get a tax break. Although before claiming, you have to make sure that your Child is Qualifying the required rules and regulations. Thus in this blog, we have explained everything that you must know about Schedule 8812. However, if you need help in filing the Form, simply dial our toll-free number to consult an accounting expert.
What is Schedule 8812?
The Schedule 8812 Form is a part of Form 1040. People use it to find out the Child Tax Credits, Report advance Child tax credit payments they receive in the previous year. Apart from that, it is also used to find out any additional tax owed in case you received extra advanced child tax credit payments during the previous year.
For instance, in case the amount you get in taxes is zero or less than the credits, then you can’t claim the full child tax credit of $2000.
What are the Basic Requirements of the Qualifying Child?
There are a few basic requirements that a person must have to fulfill to claim the Additional Child Tax Credit on Form 8821. The Qualifying Child must be:
- A US citizen or resident.
- Daughter, Son, Blood/Step Sibling/ Stepchild, or Foster Child.
- Living with you for half a year or more.
- Receiving financial support from you.
- Under the age of 17 by the end of the tax year.
The Credit amount you owe might vary according to your income level. However, in case your total credit amount is more than the amount of tax that you owe. Then the IRS needs you to file Form 8812.
Note: If the child is fulfilling the basic requirements, no one can claim the credit until you show them dependent on the Tax returns.
What are the Exceptions to Qualifying Child Requirement?
Suppose your dependent child doesn’t live with you for almost half a tax year or more; you are still Qualified for the child tax credit in the case of:
- Any Child who is born and passed away in the same tax year and they were living with you when alive.
- The Dependent lives in a School or detention facility.
- You were away from home due to Business, medical issues, or active military duty.
- In case you are a non-custodial parent, and the parent agrees not to claim the credit.
What are the Advantages of Child Tax Credits?
No matter whether you owe any taxes or not, it is always important to file your tax return and have it along with a copy of Schedule 8812.
- Tax Credits decrease your annual bill dollar-for-dollar.
- Moreover, with the Enough Qualified credits, you can easily minimize your tax bill up to a limit where Government owes you money (Tax Refund).
- Apart from that, depending on your process of refund, the money can be refunded to you in the Form of a mailed check, or it can be directly deposited in your bank account as well.
Note: With the introduction of the Stimulus Act of 2009, it is much easier to Qualify for the additional child tax credit. It is done by decreasing the earned income threshold.
How to know if you are Qualified for Child Tax Credit on Form 8812?
According to Schedule 8812, if you are planning to file the additional tax credit, you must have your earning income. While filing Schedule 8812, you have to provide the amount of gross income you earned from wages or any other job. This will guide you in calculating the amount of your total credit. Although the formula to calculate the total credit amount is a bit complicated.
The credit Amount will be decreased in case your net income reduces the speed of filling status. For example, Suppose you have one or more Qualifying Children, and your earning income is around $2,500. In such a case, you may get a refund of up to 15%. However, if the earning income is less than $2,500, you can only get a refund if you have three or more Qualifying dependents or you have paid the social Security Taxes, which might cross your earned income credit in total.
Is it possible to Form 8812 after the Divorce?
In case you are divorced or separated from your partner, then only one taxpayer between you and your partner can claim the child credit on Schedule 8812. Usually, parents who have Primary Custody are given primary custody.
However, according to IRS Publication 596, the other parent can file a child as dependent if:
- The parents are legally not living together.
- The child is getting almost half of his financial support from the non-custodial parent or living with them for half of the year or more.
- The child has lived away from the Custodial parent for the past 6 months.
- Furthermore, the non-custodial parent must have signed Form 8812 from the custodial parent accepting that “He or She will not claim for their tax return.”
How to Fill out schedule 8812?
To fill out Schedule 8812, you must have to follow the instructions. Apart from that, you also have to provide the result on Form 1040. Moreover, the individuals must include a schedule along with their tax returns.
Steps to Fill out the Form in 2023:
In order to calculate the Additional Child Tax credit, there are a few parts that must be included in the Form.
- Part I: In this portion of the Form, the details from Form 1040 are included in calculating the credit amount properly.
- Part II A: This portion must be completed to claim the Additional Child Tax Credit.
- Part II B: In case the person has three or more Qualifying children, or he/she is the of Rico, then they must have to complete this portion.
- Part II C: Calculate your total additional Child Tax Credit and use that amount to claim the credit on your Tax Form 1040.
Note: Ensure to make a claim properly because if you have filed the Child Tax Credit for other defendants or have made some error. You might get banned from claiming any of the credit for almost two years or more.
What are the Changes in the Child Tax Credit?
Like everything else, Child Tax Credit also has some modifications over the year. At the start of 2018, the Child tax credit doubled from $100/ Qualifying Child to $2000/Qualifying Child.
In the year 2022, a new announcement was made that the advanced Child Tax Credit Payments will not be given by the federal movement.
Here we are ending this blog. We hope that this article provided you with an abundant amount of information regarding Schedule 8812. However, if you want to know more, use the Live chat option and ask your Queries to the Accounting professional.
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