Child Care Tax Credit Calculator 2011, 2012

The IRS provides some relief to taxpayers with qualifying children through the child care tax credits.

By using online tax software such as, TurboTax Online you can make sure you receive the maximum amount for the child care tax credit. A free tax estimator tool is available which works as a child care tax credit calculator. By answering simple questions you will know exactly how large your child care tax credit will be.

A tax credit is very useful because it can be used to offset the amount of income tax owed. It’s different from a tax deduction because your taxable income is only decreased by a tax deduction. Depending on your income, you can get a maximum of $1,000 tax credit for each qualifying child.

The qualifying criteria of a child are laid out in six tests, namely age, citizenship, dependent, residence, support, and relationship. The child must be a U.S. citizen, national or resident under the age of 17 at the end of the calendar year. On the federal tax return form, the child must be claimed as a dependent and the child should not have contributed for more than half of his or her own support. It’s required that the child lives with his or her parent or guardian for more than half of the calendar year. To qualify for child tax credit, you must show that you are the child’s parent, foster parent, step parent, sibling or a descendent of any of these mentioned persons. A lawfully adopted child is also a qualifying child.

The calculation of your child care tax credit can be a little complicated depending on your income and filing status. The phase-out for married couples who file a joint return begins at $110,000. If they file separate returns, the phase-out begins at $55,000. The phase-out starts at $75,000 for all other taxpayers.

To calculate your child tax credit, you can use the child tax credit worksheet in Publication 972.

• In line 1, enter the number of qualifying children and multiply by $1,000.
• In line 2, enter your AGI.
• 1040 filers have to enter the specific amount in line 3 while 1040A and 1040NR filers will just enter ‘0’.
• Line 4 is the total of lines 2 and 3.
• Line 5 is the filing status.
• If result in line 4 is higher than line 5, you have to tick YES in line 6 and calculate the difference and enter the amount in the box. Otherwise, tick NO and leave the box blank. Then, insert ‘0’ in line 7.
• If you have ticked YES in line 6, multiply the amount by 5 percent and enter result in line 7.
• In line 8, compare the amount in line 1 and line 7. If line 1 is less than line 7, tick NO and stop. It means that you cannot claim the child credit or the additional child tax credit as stipulated in Form 1040, 1040A or 1040NR. If line 1 is more than line 7, then you have to tick YES and subtract line 7 from line 1 and enter the result in the box.
• In line 9, you have to enter line 46 from 1040, line 28 from 1040A or line 44 from 1040NR.
• In line 10, enter the relevant credits from corresponding forms.
• In line 11, you have to compute for the specific credits which are mentioned. If you tick NO, then you have to enter the amount from line 11. If you tick YES, you have to complete the Line 11 Worksheet.
• In line 12, you have to subtract line 11 from line 9.
• In line 13, you have to check and see if the amount on line 8 is higher than the amount on line 12. If you tick NO, just put in the amount on line 8 into the box. If you tick YES, then put in the amount on line 12 into the box. You have calculated your child care tax credit.

Don't miss out on the maximum amount for the child care tax credit.
Use the child care tax credit calculator to estimate the tax credit amount for your specific tax filing situation. TurboTax Online guarantees the biggest tax refund possible!