Child tax credit

The IRS has established the child tax credit to help reduce your taxes. You may be able to take a credit on your 2006 tax return of up to $1000 for each qualifying child under the age of 17. Also, your child must have lived with you during the year 2006. The IRS defines a qualifying child as the son, daughter, stepchild, or eligible foster child of the taxpayer and for whom the taxpayer claims a dependency exemption. Grandparents, provided the grandchildren are also claimed as dependents on the grandparents' return, can also claim the credit. There are limits on the child tax credit, and you should also be aware that the child tax credit could lower your regular tax liability so much that you may be subject to the alternative minimum tax. To claim the credit, you must file Form 1040 (10-40) or Form 1040A (10-40-A); and you'll need to provide the name and Social Security number of each qualifying child. These tips are provided to give you general information about your taxes. If you have specific questions, please consult a tax advisor or call the toll free number for Federal Tax Information and Assistance at 1-800-829-1040.