If you have a child under the age of 17, you are eligible to claim a tax credit for that child. This credit of $1,000 per child, can be claimed each year until the child turns 17. This credit does not replace the dependency exemption that you may claim for your child, so you are able to claim both.

You can claim the $1,000 credit for each child under the age of 17. If you have less of a tax liability than your credit entitlement, you can receive a refund if you meet specific qualifications. In order to claim the credit, you must have a qualifying credit and you must meet certain income requirements.

A qualifying child is considered any child that is under the age of 17 by the end of the tax year. Also, your modified adjusted gross income (MAGI) has to be under a specific limit. If your MAGI is greater than the set amount, you may receive a reduced credit, or you may not receive a credit at all.

The child tax credit is refundable, provided the amount you are eligible for is greater than what you owe in taxes. However, a refund of the credit is limited to 15% of all taxable earned income in excess of $3,000 for the tax year. Taxable earned income includes wages, salaries, tips, bonuses, commissions, and other net earnings. If you have three children or more, but your earned income is less than $3,000, you may still qualify for the credit.

The child tax credit can provide you a greater refund of the regular credit you are eligible to claim. If you are able to get a refund of the credit, you can determine your refundable amount by two methods. Either you can take 15% of your earned income greater than $3,000, or you can take the excess of your Social Security taxes, including the employer responsibility if you are self-employed. You are able to decide which method provides the greatest refund and select between the two options.