Child Tax Credits

Regardless of whether you itemize your deductions, and regardless of whether you take the dependent exemption, the child tax credit allows qualified parents to subtract a set amount ($1,000 per child from 2006 to 2010, slated to fall to $500 thereafter) from their total tax bill.

To qualify for the child tax, you must meet all the requirements for the dependent exemption, with two changes: the child must be under the age of seventeen, and your income must be within the limits established by that year's tax code. As your income increases, the exemption decreases proportionately. If your modified adjusted gross income exceeds $75,000 (as of 2006), you are not eligible. To maximize this advantage, make sure to review the annual IRS Child Tax Credit booklet, or ask your tax advisor.

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