Form 1040A Schedule 8812: Child Tax Credit (2014) – A Complete Guide

What Form 1040A Schedule 8812 Is For

Schedule 8812 serves two distinct purposes for the 2014 tax year. First, it helps taxpayers calculate the Additional Child Tax Credit, which is a refundable credit that can put money back in your pocket even if you don't owe any income tax. Think of it as the IRS giving you money back beyond what you paid in. Second, it documents that children identified with an Individual Taxpayer Identification Number (ITIN) rather than a Social Security Number meet the residency requirements to qualify for the child tax credit.

The Additional Child Tax Credit essentially picks up where the regular Child Tax Credit leaves off. The regular credit can only reduce your tax bill to zero, but the additional credit can actually create a refund. For 2014, families could claim up to $1,000 per qualifying child under age 17. If your tax bill was smaller than your total child tax credit, Schedule 8812 helped you claim the difference as a refund through the Additional Child Tax Credit.

When You'd Use This Form (Including Late or Amended Returns)

You'll need Schedule 8812 when completing your original Form 1040A or Form 1040 if you meet specific conditions. Most taxpayers completing their 2014 tax return during the normal filing season in early 2015 would have filed Schedule 8812 if instructed to do so by the Child Tax Credit Worksheet in their tax return instructions. The worksheet walks you through questions about your income, number of qualifying children, and tax liability to determine whether you should complete Schedule 8812.

For late filers submitting their 2014 return after the deadline, the same rules apply. If you're filing your 2014 return years late, you'll still need to include Schedule 8812 if you qualify for the Additional Child Tax Credit. This is important because the Additional Child Tax Credit can create a refund even when filing late, though interest on that refund stops accruing after a certain period.

If you're filing an amended return using Form 1040X to correct your 2014 taxes, you may need to complete a revised Schedule 8812. Perhaps you initially didn't claim the credit because you didn't realize you qualified, or maybe you had an additional child born in 2014 that you forgot to include. You would attach the corrected Schedule 8812 to your Form 1040X showing the recalculated credit amounts.

Key Rules and Requirements

Qualifying Child Requirements

To claim the Additional Child Tax Credit on Schedule 8812, your child must first meet all the requirements for being a qualifying child. The child must be under age 17 at the end of 2014, be your son, daughter, stepchild, foster child, brother, sister, or descendant of any of these. The child must not have provided over half of their own support and must have lived with you for more than half of 2014. Most importantly for this credit, the child must be a U.S. citizen, U.S. national, or U.S. resident alien.

Income Thresholds and Phase-Out

Income thresholds matter significantly. The child tax credit begins to phase out when your modified adjusted gross income exceeds $110,000 for married couples filing jointly, $75,000 for single filers and heads of household, and $55,000 for married persons filing separately. Modified AGI includes your regular adjusted gross income plus certain excluded income from Puerto Rico or foreign earned income.

Earned Income and Additional Child Tax Credit Calculations

For the Additional Child Tax Credit calculation, earned income plays a crucial role. You must have earned income from working, which includes wages, salaries, tips, and net self-employment earnings. The formula allows you to claim 15 percent of your earned income above $3,000. For example, if you earned $13,000, you could potentially claim 15 percent of $10,000 ($13,000 minus $3,000), which equals $1,500. However, your actual credit is limited to the smaller of this calculated amount or the unused portion of your regular child tax credit.

Families with three or more qualifying children have an alternative calculation method that might yield a larger credit. This method compares your social security and Medicare taxes paid against your earned income credit and certain other credits received. Whichever calculation method produces the higher Additional Child Tax Credit is the one you use.

ITIN Children and the Substantial Presence Test

For children identified with ITINs rather than Social Security Numbers, Part I of Schedule 8812 requires documentation that the child meets the substantial presence test. Generally, the child must be physically present in the United States for at least 31 days during 2014 and at least 183 days during the three-year period of 2012-2014, using a specific formula that counts all days in 2014, one-third of days in 2013, and one-sixth of days in 2012.

Step-by-Step Process (High Level)

Step 1: Complete the Child Tax Credit Section on Your Main Return

Begin by completing your regular tax return through the child tax credit section. When you work through the Child Tax Credit Worksheet in your Form 1040A instructions, you'll calculate your regular child tax credit first. The worksheet will tell you whether to proceed to Schedule 8812—typically this happens when your regular credit exceeds your tax liability or when you have three or more qualifying children.

Step 2: Complete Part I for Children with ITINs (If Applicable)

Start Schedule 8812 by completing Part I only if you have children identified with ITINs. For each such child, answer whether they meet the substantial presence test by checking ""Yes"" or ""No."" Use the flowchart in the instructions to help determine this. If all your children have Social Security Numbers, skip Part I entirely and move directly to Part II.

Step 3: Complete Part II – Earned Income Calculation

In Part II, enter your earned income amount. This requires careful calculation using the Earned Income Chart in the instructions. Most wage earners simply use their Form W-2 wages plus any nontaxable combat pay. Self-employed individuals and those with more complex income situations need to follow additional worksheets. Enter any nontaxable combat pay separately, as this gives military families additional credit opportunities.

Next, subtract $3,000 from your earned income and multiply the result by 15 percent. This gives you your initial Additional Child Tax Credit amount. If this amount is equal to or greater than your unused regular child tax credit, you're done—skip Part III and enter the credit amount in Part IV. If you have fewer than three qualifying children and this amount is zero or less, you cannot claim the Additional Child Tax Credit.

Step 4: Complete Part III for Three or More Qualifying Children (If Applicable)

Part III applies only to families with three or more qualifying children. Here you'll add up all your withheld Social Security, Medicare, and Additional Medicare taxes from your W-2 forms, plus various other tax amounts. After subtracting certain credits you received, you compare this alternative calculation to your Part II amount and use whichever is larger.

Step 5: Complete Part IV and Transfer the Credit to Form 1040A or 1040

Finally, in Part IV, enter your Additional Child Tax Credit on line 13 and carry this amount to the designated line on your Form 1040A (line 43) or Form 1040 (line 67). This credit will increase your refund or reduce any balance due.

Common Mistakes and How to Avoid Them

Incorrect Earned Income Calculations

One frequent error involves incorrect earned income calculations. Many taxpayers simply copy their adjusted gross income instead of properly calculating earned income. Remember that investment income, unemployment compensation, and retirement distributions don't count as earned income. Use the specific Earned Income Chart in the instructions rather than guessing which income qualifies.

Forgetting to Include Nontaxable Combat Pay

Another common mistake is forgetting to include nontaxable combat pay when it would benefit you. Military families can choose to include or exclude this pay for credit purposes. Including it increases your earned income and can boost your Additional Child Tax Credit, so run the calculation both ways to see which produces the better result.

Misunderstanding the Substantial Presence Test for ITIN Children

Parents often overlook the substantial presence test requirements for children with ITINs. Simply having an ITIN doesn't make a child ineligible—what matters is meeting the presence requirements. Some parents incorrectly check ""No"" on Part I when their child actually meets the test, costing them valuable credits. Use the detailed flowchart in the instructions to carefully track days of presence.

Skipping Part III with Exactly Three Qualifying Children

Families with exactly three qualifying children sometimes skip Part III entirely, assuming it doesn't apply to them. The instructions say ""three or more,"" which includes exactly three. These families should complete Part III to see if it yields a larger credit than the Part II calculation.

Assuming It's Too Late to Claim the Credit on Late or Amended Returns

Taxpayers filing late or amending returns sometimes forget that they can still claim this credit for past years. The Additional Child Tax Credit is refundable, meaning the IRS will send you money even years later if you qualify. Don't assume it's too late to claim credits from 2014 if you're just filing now or discovering an error.

What Happens After You File

Once you submit your tax return with Schedule 8812, the IRS processes it through their systems just like any other form. The Additional Child Tax Credit is a refundable credit, so if it creates or increases your refund, the IRS will issue that refund through direct deposit or paper check based on your indicated preference. Refunds typically arrive within 21 days for electronically filed returns and up to six weeks for paper returns.

The IRS may select your return for additional review, particularly if you're claiming the Additional Child Tax Credit. This doesn't mean you did anything wrong—the IRS simply verifies information, especially regarding qualifying children. You might receive a letter asking you to verify that your children meet all the requirements, including age, relationship, residency, and citizenship or residency status. If this happens, respond promptly with the requested documentation such as birth certificates, school records, or medical records showing the child's name and your address.

If the IRS determines your claimed credit amount is incorrect, they'll send you a notice explaining the adjustment and either requesting additional payment or issuing a different refund amount than you expected. You have the right to disagree and provide additional information supporting your original calculation. The notice will explain the appeals process and deadlines.

Your Additional Child Tax Credit won't count as income when determining eligibility for federal benefits programs like Medicaid, Supplemental Security Income, food stamps, or Temporary Assistance for Needy Families. Additionally, the refund cannot count as a resource for at least 12 months after you receive it when these programs evaluate your assets.

Any refund you receive as a result of taking the Additional Child Tax Credit may be subject to offset if you owe other federal debts, back taxes, state taxes, or past-due child support. The Treasury Offset Program will intercept your refund to pay these obligations, and you'll receive a notice explaining any offset that occurs.

FAQs

My child was born in December 2014. Can I claim the Child Tax Credit and Additional Child Tax Credit for this child?

Yes, absolutely. A child born at any point during 2014 counts as a qualifying child for the entire year, provided all other requirements are met. Your newborn doesn't need to be alive for a full 365 days—the IRS considers them to have lived with you for more than half of 2014 as long as your home was their home for more than half the time they were alive during the year.

I had three qualifying children in 2014, but after completing Part II, my credit was zero. Should I still complete Part III?

Yes, definitely complete Part III if you have three or more qualifying children, even if Part II produced zero. Part III uses a completely different calculation based on your Social Security and Medicare taxes withheld versus earned income credits received. This alternative calculation often produces a credit even when the earned income calculation doesn't, particularly for lower-income families who paid significant payroll taxes.

Can I claim the Additional Child Tax Credit if I'm receiving the Earned Income Credit?

Yes, these are two separate credits and you can claim both if you qualify for each one. In fact, many families claim both credits on the same tax return. The Additional Child Tax Credit calculation takes your earned income credit into account in Part III, but receiving the earned income credit doesn't disqualify you from also receiving the Additional Child Tax Credit.

My child has an ITIN instead of a Social Security Number. Does this mean I can't get the Additional Child Tax Credit?

Not necessarily. If your child with an ITIN meets the substantial presence test and is not otherwise treated as a nonresident alien, you can claim both the regular Child Tax Credit and the Additional Child Tax Credit. You must complete Part I of Schedule 8812 to document that your child meets the presence requirements. If your child doesn't meet the test, they won't qualify as a qualifying child for these credits.

I'm in the military and received nontaxable combat pay. How does this affect my Additional Child Tax Credit?

Nontaxable combat pay gives you flexibility. You can choose whether to include it in your earned income calculation for the Additional Child Tax Credit. Including it increases your earned income, which typically increases your Additional Child Tax Credit. The combat pay amount should appear in Box 12 of your W-2 with code Q. Enter this amount on line 4b of Schedule 8812, and it will be added to your earned income in the calculation.

We're married filing separately. Can we both claim children for the Additional Child Tax Credit?

No, each qualifying child can only be claimed by one taxpayer. If you're married filing separately, you'll need to decide which spouse claims which children. The spouse claiming the child must be the one with whom the child lived for more than half the year. The income threshold for married filing separately is $55,000, which is half of the joint filing threshold, potentially phasing out your credit more quickly.

I made a mistake and didn't claim the Additional Child Tax Credit on my 2014 return. Is it too late to claim it now?

You can still claim it by filing an amended return using Form 1040X. Generally, you have three years from the date you filed your original return or two years from the date you paid the tax, whichever is later. Since the Additional Child Tax Credit is refundable, you can receive money back even if you had no tax liability. Attach a corrected Schedule 8812 to your Form 1040X showing the credit you should have received.

Sources

This summary is based on official IRS forms and instructions available at IRS.gov, including the 2014 Schedule 8812 instructions and Publication 972.

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