Detailed Example

Steve and Gretchen Leaf have four children who are all qualifying children for the child tax credit. Steve and Gretchen's adjusted gross income (AGI) (Form 1040, line 36) is $112,000. This amount represents Steve's salary and is considered taxable earned income. They will file a joint return. Assume that their tax (Form 1040, line 44) is $2,000.

Steve and Gretchen have the 2002 Form 1040 tax package and instructions. They want to see if they qualify for the child tax credit, so they follow the steps for line 50 in the instructions.

Step 1.   In Step 1 of those instructions Steve and Gretchen determine all four children qualify for the child tax credit.

Step 2.   The Leafs check the box in column (4) of line 6c on Form 1040 for each child.

Step 3.   In Step 3 the Leafs find out they must use Publication 972 to figure their child tax credit because their AGI is more than $110,000. When they read Publication 972, they find out they must complete the Child Tax Credit Worksheet which begins on page 3.

Completing the Child Tax Credit Worksheet.   Steve and Gretchen fill out the worksheet (shown here) to find out how much child tax credit they can claim.

1. Steve and Gretchen enter the number of qualifying children (4) and multiply 4 by $600 and enter the result ($2,400) in the box for line 1.
2. They enter their AGI ($112,000) in the box for line 2.
3. They enter -0- in the box for line 3 since they did not exclude any income from Puerto Rico or any income on Form 2555, Form 2555-EZ, or Form 4563.
4. They add $112,000 and $0 and enter the result ($112,000) in the box for line 4.
5. They enter $110,000 in the box for line 5 since they will file a joint return.
6. They check the Yes box in line 6 since the amount on line 4 ($112,000) is more than the amount on line 5 ($110,000). They subtract line 5 ($110,000) from line 4 ($112,000) and enter the result ($2,000) in the box for line 6.
7. They multiply the amount on line 6 ($2,000) by 5% (.05) and enter the result ($100) in the box for line 7.
8. They check the Yes box in line 8 since the amount on line 1 ($2,400) is more than the amount on line 7 ($100). They subtract line 7 ($100) from line 1 ($2,400) and enter the result ($2,300) in the box for line 8.
9. They enter the amount from line 44 of their Form 1040 ($2,000) in the box for line 9.
10. Steve and Gretchen did not have any of the credits on lines 45, 46, 47, 48, or 49 of Form 1040, so they enter -0- in the box for line 10.
11. They check the No box on line 11 because they are not claiming any of the credits shown on line 11. They enter -0- in the box for line 11.
12. They subtract the amount on line 11 ($0) from the amount on line 9 ($2,000) and enter the result ($2,000) in the box for line 12.
13. They check the Yes box in line 13 since the amount on line 8 ($2,300) is more than the amount on line 12 ($2,000). They enter the amount from line 12 ($2,000) in the box for line 13. Their child tax credit is $2,000. They enter $2,000 on line 50 of their Form 1040.

Steve and Gretchen read the TIP in the worksheet and find that they may be able to take the additional child tax credit because they checked the Yes box in line 13.

Steve and Gretchen complete their Form 1040 through line 65 and use Form 8812 to see if they can claim the additional child tax credit.

Completing Form 8812.  

1. They enter the amount from line 8 of their Child Tax Credit Worksheet ($2,300) on line 1.
2. On line 2, they enter the amount of their child tax credit ($2,000) from line 50 of their Form 1040.
3. Steve and Gretchen subtract the amount on line 2 ($2,000) from the amount on line 1 ($2,300) and enter the result ($300) on line 3.
4. They read the instructions on the back of the form and answer No to each of the four questions. They enter the amount from line 7 of their Form 1040 ($112,000) on line 4.
5. Since the amount on line 4 ($112,000) is more than $10,350, they check the Yes box and subtract $10,350 from the amount on line 4 ($112,000) and enter the result ($101,650) on line 5.
6. They multiply the amount on line 5 ($101,650) by 10% (.10) and enter the result ($10,165) on line 6. Next, they are asked if they have three or more qualifying children. Steve and Gretchen check the Yes box. Since line 6 ($10,165) is more than line 3 ($300), they skip Part II and enter the amount from line 3 ($300) on line 13. This $300 is their additional child tax credit. They also enter this amount on line 66 of their Form 1040.

Steve and Gretchen will get a child tax credit of $2,000 and an additional child tax credit of $300 for the year.

Leaf's Child Tax Credit Worksheet page 1

Leaf's Child Tax Credit Worksheet page 2

Leaf's Filled-in Form 8812

How To Get Tax Help

You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways. By selecting the method that is best for you, you will have quick and easy access to tax help.

Contacting your Taxpayer Advocate.   If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate.

The Taxpayer Advocate represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review.

To contact your Taxpayer Advocate:

• Call the Taxpayer Advocate at 1-877-777-4778.
• Call, write, or fax the Taxpayer Advocate office in your area.
• Call 1-800-829-4059 if you are a TTY/TDD user.

For more information, see Publication 1546, The Taxpayer Advocate Service of the IRS.

Free tax services.   To find out what services are available, get Publication 910, Guide to Free Tax Services. It contains a list of free tax publications and an index of tax topics. It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics.

Personal computer. With your personal computer and modem, you can access the IRS on the Internet at www.irs.gov. While visiting our web site, you can:

• See answers to frequently asked tax questions or request help by e-mail.
• Download forms and publications or search for forms and publications by topic or keyword.
• Order IRS products on-line.
• View forms that may be filled in electronically, print the completed form, and then save the form for recordkeeping.
• View Internal Revenue Bulletins published in the last few years.
• Search regulations and the Internal Revenue Code.
• Receive our electronic newsletters on hot tax issues and news.
• Learn about the benefits of filing electronically (IRS e-file).
• Get information on starting and operating a small business.

You can also reach us with your computer using File Transfer Protocol at ftp.irs.gov.

TaxFax Service. Using the phone attached to your fax machine, you can receive forms and instructions by calling 703-368-9694. Follow the directions from the prompts. When you order forms, enter the catalog number for the form you need. The items you request will be faxed to you.

For help with transmission problems, call the FedWorld Help Desk at 703-487-4608.

Phone. Many services are available by phone.

• Ordering forms, instructions, and publications. Call 1-800-829-3676 to order current and prior year forms, instructions, and publications.
• Asking tax questions. Call the IRS with your tax questions at 1-800-829-1040.
• Solving problems. Take advantage of Everyday Tax Solutions service by calling your local IRS office to set up an in-person appointment at your convenience. Check your local directory assistance or www.irs.gov for the numbers.
• TTY/TDD equipment. If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications.
• TeleTax topics. Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics.

Evaluating the quality of our telephone services. To ensure that IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. One method is for a second IRS representative to sometimes listen in on or record telephone calls. Another is to ask some callers to complete a short survey at the end of the call.

Walk-in. Many products and services are available on a walk-in basis.

• Products. You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Some IRS offices, libraries, grocery stores, copy centers, city and county governments, credit unions, and office supply stores have an extensive collection of products available to print from a CD-ROM or photocopy from reproducible proofs. Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes.
• Services. You can walk in to your local IRS office to ask tax questions or get help with a tax problem. Now you can set up an appointment by calling your local IRS office number and, at the prompt, leaving a message requesting Everyday Tax Solutions help. A representative will call you back within 2 business days to schedule an in-person appointment at your convenience.

Mail. You can send your order for forms, instructions, and publications to the Distribution Center nearest to you and receive a response within 10 workdays after your request is received. Find the address that applies to your part of the country.

• Western part of U.S.:
  Western Area Distribution Center
  Rancho Cordova, CA 95743-0001
• Central part of U.S.:
  Central Area Distribution Center
  P.O. Box 8903
  Bloomington, IL 61702-8903
• Eastern part of U.S. and foreign addresses:
  Eastern Area Distribution Center
  P.O. Box 85074
  Richmond, VA 23261-5074

CD-ROM for tax products. You can order IRS Publication 1796, Federal Tax Products on CD-ROM, and obtain:
 

• Current tax forms, instructions, and publications.
• Prior-year tax forms and instructions.
• Popular tax forms that may be filled in electronically, printed out for submission, and saved for recordkeeping.
• Internal Revenue Bulletins.

The CD-ROM can be purchased from National Technical Information Service (NTIS) by calling 1-877-233-6767 or on the Internet at http://www.irs.gov/cdorders. The first release is available in early January and the final release is available in late February.

CD-ROM for small businesses. IRS Publication 3207, Small Business Resource Guide, is a must for every small business owner or any taxpayer about to start a business. This handy, interactive CD contains all the business tax forms, instructions and publications needed to successfully manage a business. In addition, the CD provides an abundance of other helpful information, such as how to prepare a business plan, finding financing for your business, and much more. The design of the CD makes finding information easy and quick and incorporates file formats and browsers that can be run on virtually any desktop or laptop computer.

It is available in March. You can get a free copy by calling 1-800-829-3676 or by visiting the website at www.irs.gov/smallbiz.

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