275  7TH Ave  7th floor New York , NY 10001                                                                                                                dcullinanecpa@yahoo.com

​                                                                                                                                                                                                     Chelsea / Lower Manhattan​​

​Daniel Cullinane CPA                                   p 848-250-9587                                                                                                                                     

Should the credit be disallowed an additional child tax credit may be allowed. Individuals are eligible for a refundable child tax credit equal to 15% of their earned income in excess of $3,000.The earned income limitation is set at $3,000 through 2017. For taxpayers with three or more qualifying children, the refundable credit will be equal to the lesser of the credit that would have been allowed without the tax limit and the excess of the taxpayer's social security taxed for the year over the taxpayer's earned income credit for the year. The credit is allowed up to the $1,000 per child credit amount, if the allowable child tax credit exceeds the total tax liability taking into account the AMT.


If you pay someone to take care of your children or other qualifying persons so that you and your spouse can work or got to school, then you qualify to take the credit for child and dependent care expenses. Qualifying expenses include expenses paid for household services and for the care of a qualifying individual A qualifying individual can include  a dependent who was under age 13 at the close of the tax year or a dependent who was physically or mentally incapable of self care and who had lived with you for more than half the year.

The maximum amount of dependent care expense on which you can calculate the credit is $3,000 for one qualifying individual or $6,000 for two or more qualifying individuals. The amount of the dependent care expenses eligible for a credit must be reduced by any payments received through an employer provided dependent care assistance program. "the amount of allowable credit is based on your AGI, with the applicable credit percentage ranging from 20% to 35%. The 35% credit is for lower income taxpayers. Once your AGI exceeds $43,000, the maximum rate allowed id 20%. These percentages entitle you to a credit of $600/$1,200 and $1050/$2,100 respectively based on the number of qualifying individuals



There are many credits available to reduce your federal tax liability, but all are subject to complex limitations based on income and whether or not you are subject to alternative minimum tax​


The US taxes its residents on their worldwide income including foreign sourced income which may also be subject to tax in foreign jurisdictions. To avoid double taxation , subject to certain limitations, the US allows its residents either a credit or deduction for taxes imposed by foreign countries and possessions of the US. In general, a credit is more advantageous as it is a dollar for dollar offset to the taxpayer's US income tax liability, whereas a deduction is a reduction to income subject to tax. There are limits on the amount of foreign tax credits an individual may be able to take in a particular year. There is a separate calculation of foreign tax credits allowed each year which could result in a difference between your regular and AMT tax credit allowed. Any foreign  tax credits not fully utilized in the current year due to limitations may be carried back one year and forward ten years. The most common forms of income that result in payment of foreign taxes include dividends  paid by foreign corporations and business income earned by foreign pass through entities. It is very common to incur foreign taxes through securities that are held in your investment accounts or from an underlying ownership interest in a partnership or other pass through entity that has an investment in a foreign entity.


A nonrefundable child tax credit of $1,000 per qualifying child is available to offset your tax liability. Qualifying children are defined as:

  • A son, daughter, stepson, stepdaughter or a descendant of such child, a brother, sister, stepbrother, stepsister or a descendant of such relative
  • A child who has not attained the age of 17 by the end of the tax year and who is either a US citizen or national or a resident of the US

However, the child tax credit is not available to many taxpayers since it begins to phase out when MAGI reaches $110,000 for joint filers, $55,000 for married filing separate and $75,000 for unmarried individuals, head of household and qualify widowers. The credit is reduced by $50 for every $1,000 or fraction there of of MAGI above the threshold amount.