For 1998, the maximum credit you can claim is $400 for each qualifying child. In 1999 this amount increases to $500 for each qualifying child.

Limits On The Credit

You must reduce your credit if:

• Your modified adjusted gross income is above a certain threshold amount, or
• Your tax liability is less than the credit (unless you have 3 or more qualifying children and are entitled to an additional refundable credit).

Modified adjusted gross income. For purposes of the child tax credit, modified adjusted gross income is adjusted gross income (AGI) increased by the total of any:

• Exclusion of income from Puerto Rico, and
• Amount from Form 2555, Foreign Earned Income, lines 43 and 48; Form 2555-EZ, Foreign Earned Income Exclusion, line 18; and Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, line 15.

If you do not have any of the above, modified AGI is the AGI amount on line 34 of Form 1040 or line 19 of Form 1040A.

Threshold amount. The threshold amount for each filing status is shown in the following table.

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