Form 1040A Child Tax Credit (2016): A Layman's Guide
What the Form Is For
The Child Tax Credit is a valuable tax benefit designed to help families with qualifying children reduce their federal income tax bill. For tax year 2016, this credit could put up to $1,000 per qualifying child directly back in your pocket by reducing the amount of tax you owe. The credit is claimed on Form 1040A, line 35 (or Form 1040, line 52), and is calculated using the Child Tax Credit Worksheet found in the form instructions or IRS Publication 972.
If the credit exceeds your tax liability, you might qualify for the Additional Child Tax Credit, which can result in a refund even if you don't owe any taxes. This refundable portion is claimed using Schedule 8812 and appears on Form 1040A, line 43. Think of the regular Child Tax Credit as reducing taxes you owe, while the Additional Child Tax Credit can actually put money in your hands through a refund.
The credit exists in addition to other family-related tax benefits like the Child and Dependent Care Credit and the Earned Income Credit—you can potentially claim all of these if you qualify for each one separately.
When You'd Use It (Including Late or Amended Returns)
Original Returns
Most taxpayers claim the Child Tax Credit when filing their original tax return by the April deadline (April 18, 2017, for 2016 returns). However, timing matters in specific ways:
Original Returns: You claim the credit when you first file your 2016 Form 1040A. If you're eligible, include it on your return filed by the due date, including any extensions you've obtained.
Critical Identification Number Deadline
Here's an important rule that catches many people off guard: both you and your qualifying child must have valid identification numbers—typically Social Security Numbers (SSNs), but also Individual Taxpayer Identification Numbers (ITINs) or Adoption Taxpayer Identification Numbers (ATINs)—by the due date of your return, including extensions. If you don't have these numbers by that deadline, you cannot claim the Child Tax Credit or Additional Child Tax Credit on either your original return or any amended return, even if you obtain the numbers later. This is a strict rule with no exceptions.
Amended Returns
If you discover you were eligible for the credit but didn't claim it on your original return, you can file an amended return using Form 1040X. However, the identification number rule still applies—if you or your child didn't have the required SSN, ITIN, or ATIN by your original filing deadline (including extensions), you cannot go back and claim the credit later, even on an amendment.
Refund Delay for 2016
Due to law changes, if you claim the Additional Child Tax Credit, the IRS cannot issue any part of your refund before February 15, 2017. This delay applies to your entire refund, not just the portion related to the credit. The IRS will still process your return when filed, but refunds are held until mid-February.
Key Rules or Details for 2016
Qualifying Child Requirements
To claim the Child Tax Credit, you must meet specific requirements related to both yourself and your child:
Your child must meet all seven conditions:
(1) be your son, daughter, stepchild, foster child, sibling, half-sibling, stepsibling, or descendant of any of these (like a grandchild or niece);
(2) be under age 17 at the end of 2016 (a child who turned 17 on December 31, 2016, does not qualify);
(3) not provide over half of their own financial support during the year;
(4) live with you for more than half of 2016;
(5) be claimed as your dependent;
(6) not file a joint return unless only to claim a refund; and
(7) be a U.S. citizen, U.S. national, or U.S. resident alien.
Income Phase-Out Thresholds
The $1,000-per-child credit begins to phase out if your modified AGI exceeds:
- $110,000 for married filing jointly
- $75,000 for single, head of household, or qualifying widow(er)
- $55,000 for married filing separately
For every $1,000 (or portion thereof) above the threshold, the credit is reduced by $50.
Tax Liability Limitation
The regular Child Tax Credit can only reduce your tax to zero—it won’t create a refund on its own. If your calculated credit exceeds your tax liability, you can only claim up to that amount.
Additional Child Tax Credit Eligibility
If your Child Tax Credit is limited by your tax liability, you may qualify for the Additional Child Tax Credit using Schedule 8812. This refundable credit is based on your earned income.
Forms You Can Use
The credit can be claimed on Form 1040, 1040A, or 1040NR, but not on Form 1040EZ. Form 1040A filers must also meet certain eligibility requirements regarding income sources.
Step-by-Step (High Level)
Step 1: Determine Eligibility
Review the seven qualifying child requirements. Verify required identification numbers (SSN, ITIN, or ATIN) were issued by your filing deadline.
Step 2: Complete Your Return Through Line 30
Fill out Form 1040A through line 30 to determine your tax liability.
Step 3: Use the Child Tax Credit Worksheet
Use the worksheet from the 1040A instructions or Publication 972 to calculate your credit and any phase-out reduction.
Step 4: Enter the Credit on Line 35
Transfer your calculated nonrefundable credit to line 35.
Step 5: Check for Additional Child Tax Credit
If your credit exceeded your tax liability, complete Schedule 8812 and enter the refundable credit on line 43.
Step 6: Check Box in Column 4
On line 6c, check column 4 for each qualifying child.
Step 7: Attach Schedule 8812 If Applicable
Attach Schedule 8812 if claiming the Additional Child Tax Credit or if any qualifying child has an ITIN.
Common Mistakes and How to Avoid Them
Mistake #1: Missing or Late Identification Numbers
Failing to have valid SSNs, ITINs, or ATINs by the filing deadline permanently disqualifies you from claiming the credit for 2016.
Mistake #2: Claiming Ineligible Children
Ensure each child truly meets all seven qualifying requirements.
Mistake #3: Using the Wrong Tax Form
The credit cannot be claimed on Form 1040EZ.
Mistake #4: Not Checking the Column 4 Box
Forgetting to check column 4 on line 6c may delay or deny your credit.
Mistake #5: Forgetting to Claim the Additional Child Tax Credit
If your tax liability is low, you may be eligible for a refundable credit using Schedule 8812.
Mistake #6: Income Calculation Errors
Incorrect modified AGI or earned income calculations can produce incorrect credit amounts.
Mistake #7: Not Keeping Documentation
The IRS may request proof of age, residency, or relationship.
What Happens After You File
Processing Timeline
The IRS processes your return normally, but refunds involving the Additional Child Tax Credit cannot be issued before February 15, 2017.
Refund Timing
Most refunds issue within 21 days after February 15 for e-filers using direct deposit.
IRS Verification
The IRS may request documentation if your Child Tax Credit claim is flagged for review.
Math Error Corrections
The IRS may adjust your refund if they identify calculation errors.
Credit Disallowance Consequences
Improper claims may result in a two-year or ten-year ban and possible penalties.
Amended Return Processing
Amended returns generally take 12–16 weeks to process.
FAQs
My child turns 17 in December 2016. Can I still claim the credit for them?
It depends on the exact date…
I'm divorced and share custody. Who claims the Child Tax Credit?
Generally, the custodial parent claims the credit…
Can I claim the credit for my nephew who lives with me?
Potentially, yes…
What's the difference between the Child Tax Credit and the Additional Child Tax Credit?
The Child Tax Credit is non-refundable…
I have an ITIN for my child instead of a Social Security Number. Can I still claim the credit?
Yes, but with additional requirements…
My income is just above the phase-out threshold. How much will I lose?
The credit reduces by $50 per $1,000 above your threshold…
Can I claim the credit if I file Form 1040EZ to keep things simple?
No. You must file Form 1040A or Form 1040.
