From Rod Powers,
Your Guide to US Military.
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Feb 1 2004

If you expect to qualify for the earned income credit for 2004, you can choose to get part of the credit in advance by giving a completed 2004 Form W-5 to your appropriate finance office. The credit will be included regularly in your pay.

If you received advance earned income credit payments in 2003, you must file either Form 1040 or Form 1040A for 2003 to report the payments.

Child Tax Credit

The child tax credit reduces your tax. If you have children, you may be able to take a child tax credit on your tax return for each of your qualifying children.

Caution: The child tax credit is not the same as the credit for child and dependent care expenses. See Publication 503 for more information on the credit for child and dependent care expenses.

Qualifying Child. A qualifying child for purposes of the child tax credit must be all of the following.

1) Under age 17 at the end of 2003.

2) A citizen or resident alien of the United States.

3) Claimed as your dependent.

4) Your:

• Son, daughter, stepson, stepdaughter, or adopted child (or a descendant of your son, daughter, stepson, stepdaughter, or adopted child—for ex-ample, your grandchild),
• Brother, sister, stepbrother, or stepsister (or the child or grandchild of your brother, sister, step-brother, or stepsister) if you care for the individual as you would your own child, or
• Eligible foster child.

Adopted child. A child placed with you by an authorized placement agency for legal adoption is an adopted child even if the adoption is not final.

Eligible foster child. An eligible foster child is any child you cared for as your own and who is placed with you by an authorized placement agency.

Note. A child who was born or died in 2003 is considered to have lived with you for all of 2003 if your home was the child’s home for the entire time he or she was alive during 2003.

Amount of Credit. The maximum credit that you can claim is $1,000 for each qualifying child.

Limits on the credit. You must reduce your child tax credit if either (1) or (2), below, applies.

1) The amount on line 43 (Form 1040) or line 28 (Form 1040A) is less than the credit. If the amount is zero, you cannot take this credit because there is no tax to reduce. However, you may be able to take the additional child tax credit. See Additional Child Tax Credit, later.

2) Your modified adjusted gross income (AGI) is more than the amount shown below for your filing status.

• Married filing jointly — $110,000
• Single, head of household, or qualifying widow(er) — $75,000
• Married filing separately — $55,000

Modified AGI. For purposes of the child tax credit, your modified AGI is your AGI plus the following amounts that may apply to you.

• Any amount excluded from income because of the exclusion of income from Puerto Rico.
• Any amount on lines 43 and 48 of Form 2555, Foreign Earned Income.
• Any amount on line 18 of Form 2555–EZ, Foreign Earned Income Exclusion.
• Any amount on line 15 of Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa.

If you do not have any of the above, modified AGI is the AGI amount on line 35 (Form 1040) or line 21 (Form 1040A). Claiming the Credit. To claim the child tax credit, you must file Form 1040 or Form 1040A. You must provide the name and identification number (usually a social security number) on your tax return for each qualifying child.

Answer the Questions in your form instructions for line 49 (Form 1040) or line 33 (Form 1040A) to find out which child tax credit worksheet you can use to compute the credit.

Caution: If you answer Yes to question 1, 2, or 3 in your Form 1040 instructions or question 1 or 2 in your Form 1040A instructions, you must complete the Child Tax Credit Worksheet in Publication 972, Child Tax Credit.

For more information on the child tax credit, see the instructions for Form 1040 or Form 1040A.

Additional Child Tax Credit

This credit is for certain individuals who get less than the full amount of the child tax credit. The additional child tax credit may give you a refund even if you do not owe any tax.

How to claim the additional child tax credit. To claim the additional child tax credit, follow the steps below.

1) Make sure you figured the amount, if any, of your child tax credit. See Claiming the Credit, earlier.

2) Use Form 8812, Additional Child Tax Credit, to see if you can take the additional child tax credit only if you answered Yeson line 4 or line 5 of the Child Tax Credit Worksheet.

3) If you have an additional child tax credit on line 13 of Form 8812, carry it to line 65 (Form 1040) or line 42 (Form 1040A).

Above Information Courtesy of Internal Revenue Service (IRS).