What's the difference between the child tax credit and a dependent exemption?
An exemption will directly reduce your income. A credit will reduce your tax liability.
A dependent exemption is the income you can exclude from taxable income for each of your dependents. In 2016, you can exclude $4,050 for each dependent.
The child tax credit:
- Is a credit that offsets the tax you owe dollar for dollar
- Is available if you have a child younger than age 17 at the end of the year
- Can reduce your tax by as much as $1,000, (2003 - 2016, through the Working Families Tax Relief Act) for each qualifying child
You can only claim the child tax credit if you claim the child as a dependent.
If you meet the requirements, you can claim an exemption for a dependent on your return and the child tax credit for that dependent.
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So how much will you get (or owe) this year? That’s the million-dollar question. We happen to have three very useful calculators to help you estimate your refund or balance due.