Taxpayer asks:If I’m a single stay at home mom with 2 kids but no income Am I eligible for a child credit refund?Taxgirl says:Unfortunately, no. If you don’t have any income, you won’t benefit from most federal income tax credits.When it comes to the Child Tax Credit, you can’t claim the credit if you don’t have income. This is because the credit is nonrefundable which means that if the available tax credit exceeds your tax liability, your tax bill is simply reduced to zero. So even if you were able claim both kids at $1,000 per child (the maximum available child tax credit for the 2015 tax year), if you don’t have any tax liability, you can’t benefit from the credit. The credit does not carry forward to any future years (or back to any past years): it simply disappears.Some taxpayers who don’t receive the full benefit from the Child Tax Credit may qualify for the Additional Child Tax Credit. The Additional Child Tax Credit is refundable which means you can receive a refund even if you do not owe any tax. However, to qualify, you must have at least $3,000 of earned income or have at least three qualifying dependents (additional criteria applies).Other child-related credits include the Earned Income Tax Credit (EITC) and the Child and Dependent Care Credit. Like the Additional Child Tax Credit, the EITC is refundable which means that you can receive a refund even if you do not owe any tax. However, in order to qualify for the EITC, you must have income from working or running a business. Similarly, the Child and Dependent Care Credit is only available to those parents who work (or are looking for work) and who have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment.
Debra Moore, CPA, Owner
P.O. Box 751
Bedford, VA 24523
moorebookkeeping at msn. com
Tired of searching for someone qualified and reliable to do your bookkeeping?
Does your business lack accurate and timely financial information?
Let us help!
Timely & Informative
- Bullet Journal
- Changes to 2018 Taxes
- New 20 percent deduction for passthrough businesses Many owners of sole proprietorships, partnerships, trusts and S corporations can deduct up to 20 percent of their qualified business income.
- When To Expect Your W-2, 1099 & More Tax Forms In 2017 (And What To Do If They’re Missing)
- Ready for Tax Season?
Check Your CreditEveryone should check their credit report at least annually. Go to this free, secure site to check it. To assure that your credit file is disclosed only to you, the nationwide consumer credit reporting companies will authenticate your identity utilizing the personal identification information you provide on this site, including, but not limited to, your Social Security number, and then require that you answer certain questions. For your protection, if your identity cannot be authenticated for online delivery of your credit report, you will receive further instructions on how to request your report for delivery by the U.S. Postal Service. Failure to authenticate for online delivery of your annual credit report is not an indicator of fraudulent activity or identity theft.