IRS Form 1040A (Schedule 8812) (2012): Child Tax Credit

What IRS Form 1040A (Schedule 8812) (2012) Is For

IRS Form 1040A (Schedule 8812) (2012) is used to calculate the additional child tax credit when the regular child tax credit is larger than the taxpayer’s federal income tax liability. It helps eligible families determine how much of the remaining credit becomes refundable, based on their earned income, the number of qualifying children, and adjusted gross income.

For step-by-step guidance on claiming child tax credits and meeting IRS dependent rules, visit our IRS Form Help Center.

When You’d Use IRS Form 1040A (Schedule 8812) (2012)

You would use this form when you need to determine whether you can claim the remaining portion of the child tax credit as a refundable credit.

• Filing a federal income tax return with unused child tax credits: You would use this form when your regular child tax credit is larger than your federal income tax liability, and you need to calculate the additional child tax credit.
  
  
• Having qualifying children who generate a remaining credit amount: You would use this form when your qualifying child leaves unused credit on the same tax year’s return, and that unused portion may qualify as a refundable credit.
  
  
• Filing late or amending a tax return: Use this form to correct your tax return after the due date, allowing you to calculate earned income accurately, the number of qualifying children, or credit amounts.
  
  
• Having self-employment income that affects earned income calculations: You would use this form when recalculating earned income due to the presence of self-employment income that may increase or reduce your refundable credit.

Key Rules or Details for Tax Year 2012

• Qualifying child requirement for Schedule 8812: A qualifying child must be under age 17, must have lived with the taxpayer for more than half the year, must not have provided more than half their own support, and must meet citizenship or resident alien requirements.
  
  
• Adjusted Gross Income Limits: The maximum child tax credit may be reduced when adjusted gross income exceeds the phase-out thresholds associated with the taxpayer’s filing status, including married filing jointly.
  
  
• Rules for an adopted child or an eligible foster child: An adopted child who lived with the taxpayer for the entire year may qualify, even if they do not meet the substantial presence test, and an eligible foster child may qualify when placed by a court or an authorized agency.
  
  
• Rules for the Individual Taxpayer Identification Number: A child who has an ITIN must meet the substantial presence test, unless covered by notable adoption exceptions established for dependent children. 

If you need to amend or catch up on past filings for the child tax credit, see our unfiled federal income tax return resource.

Step-by-Step (High Level)

These steps outline how to complete IRS Form 1040A (Schedule 8812) (2012) accurately.

1. Confirm the number of qualifying children: You confirm how many qualifying children meet the age, relationship, residency, citizenship, and support tests. You then determine whether the child tax credit and the additional child tax credit apply.
   
   
2. Determine whether residency documentation is required: You determine whether a child with an individual taxpayer identification number must meet the substantial presence test. Adoption rules may instead allow the child to qualify as a dependent.
   
   
3. Calculate earned income: You calculate earned income by combining wages, tips, self-employment income, and nontaxable combat pay while removing amounts that are not included in the credit formula.
   
   
4. Calculate the unused portion of the child tax credit: You determine how much of the full child tax credit remains after it reduces your federal income tax liability so that you can apply the refundable formula.
   
   
5. Apply the 15 percent formula or the payroll tax test: You calculate the refundable credit by applying the earned income formula or by using the Social Security taxes paid test when you have three or more dependent children.
   
   
6. Enter the refundable credit on your tax return: You enter the final credit amount on your federal income tax return so that you can receive the tax refund through direct deposit or paper check.

If you receive IRS penalties or restrictions related to your child tax credit claim, learn about penalty abatement options.

Common Mistakes and How to Avoid Them

Several common issues can delay a tax refund or result in the denial of the additional child tax credit.

• Incorrect earned income calculations: Many filers miscalculate earned income by excluding self-employment income or misreporting foreign earned income. You avoid this by verifying all related tax forms before completing the worksheet.
  
  
• Missing documentation for a qualifying child: Some filers attempt to claim the child without proof of age, identity, or residency, such as a child’s birth certificate or school records. To avoid this, keep documentation that confirms the child generally meets all requirements.
  
  
• Claiming the same child on separate returns: A noncustodial parent may attempt to claim a child who can only be claimed by the custodial parent. You avoid this by following the tie-breaker rules and ensuring that only the correct parent claims the child.
  
  
• Errors involving the individual taxpayer identification number: Some taxpayers claim the additional child tax credit for a child with an ITIN who does not meet the substantial presence test. To avoid this, review the residency rules for resident alien status and adoption exceptions.

What Happens After You File

After you file IRS Form 1040A (Schedule 8812) (2012), the IRS reviews your tax return to confirm the qualifying child information, earned income details, and total credit calculations. If the entries match IRS records, the refundable credit is issued as part of your tax refund, often through direct deposit. If a math or clerical error or an improper claim is detected, the IRS may send a notice requesting clarification or documentation. 

FAQs

Can I claim the additional child tax credit with two qualifying children if I have low earned income?

Yes, you may qualify for the additional child tax credit with two qualifying children if your earned income exceeds the threshold used in the Schedule 8812 calculation. Your credit amount depends on how much of the regular child tax credit remains after reducing your federal income tax liability.

Does foreign-earned income affect the maximum credit amount for Schedule 8812?

Yes, Foreign-earned income can affect the maximum credit amount because it may change your adjusted gross income and earned income calculations for the tax year. 

Can a married couple filing jointly claim the credit if the child has an ITIN?

Yes, a married filing jointly couple may claim the Child Tax Credit and the Additional Child Tax Credit for a child with an Individual Taxpayer Identification Number if the child meets the residency rules and qualifies as a resident alien. Documentation may be required to show that the child lived with the parents for more than half the year.

What happens if the IRS finds intentional disregard in claiming the credit?

If the IRS determines that a taxpayer acted with intentional disregard or reckless behavior when claiming the credit, future tax benefits may be restricted.