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Publication 972 2003 Tax Year

Publication 972
Main Contents

This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

Child Tax Credit

This credit is for people who have a qualifying child as defined on this page. It is in addition to the credit for child and dependent care expenses (on Form 1040, line 45, or Form 1040A, line 29) and the earned income credit (on Form 1040, line 63, or Form 1040A, line 41).

The maximum amount you can claim for the credit is $1,000 for each qualifying child.

Qualifying Child

A qualifying child for purposes of the child tax credit is a child who:

  • Is claimed as your dependent on line 6c of Form 1040 or Form 1040A, and
  • Was under age 17 at the end of 2003, and
  • Is your (a) son, daughter, adopted child, stepchild, or a descendant of any of them (for example, your grandchild); (b) brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew), whom you cared for as you would your own child; or (c) foster child (any child placed with you by an authorized placement agency whom you cared for as you would your own child), and
  • Is a U.S. citizen or resident alien.

Note:

The above requirements are not the same as the requirements to be a qualifying child for the earned income credit.

An adopted child is always treated as your own child. An adopted child includes a child placed with you by an authorized placement agency for legal adoption even if the adoption is not final. An authorized placement agency includes any person or court authorized by state law to place children for legal adoption.

Limits on the Credit

You must reduce your child tax credit if either (1) or (2) applies.

  1. The amount on line 43 (Form 1040) or line 28 (Form 1040A) is less than the credit. If this amount is zero, you cannot take this credit because there is no tax to reduce. But you may be able to take the additional child tax credit. See Additional Child Tax Credit, later.
  2. Your modified adjusted gross income (AGI) is above the amount shown below for your filing status.

  • Married filing jointly – $110,000.
  • Single, head of household, or qualifying widow(er) – $75,000.
  • Married filing separately – $55,000.

Modified AGI.

For purposes of the child tax credit, your modified AGI is your AGI plus the following amounts that may apply to you.

  • Any amount excluded from income because of the exclusion of income from Puerto Rico.
  • Any amount on line 43 or line 48 of Form 2555, Foreign Earned Income.
  • Any amount on line 18 of Form 2555–EZ, Foreign Earned Income Exclusion.
  • Any amount on line 15 of Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa.

If you do not have any of the above, modified AGI is the AGI amount on line 35 (Form 1040) or line 21 (Form 1040A).

Claiming the Credit

To claim the child tax credit, you must file Form 1040 or Form 1040A. You cannot claim the child tax credit on Form 1040EZ. You must provide the name and identification number (usually a social security number) on your tax return for each qualifying child.

Advance Child Tax Credit Payment

You must reduce your 2003 child tax credit by any advance child tax credit payment you received in 2003. Enter the amount of any advance payment you received (before offset) on line 2 of your Child Tax Credit Worksheet. The amount of your advance payment (before offset) is shown on Notice 1319. This notice was mailed to you in 2003 if you received an advance payment. If you do not have this notice, you can check the amount of your advance payment (before offset) on the IRS website at www.irs.gov or call us at 1–800–829–1040.

If you received an advance payment but do not have a qualifying child for 2003, you do not have to pay back the amount you received. Do not enter the amount of your advance payment on your return.

If you filed a joint return for 2002, but for 2003 you are not filing a joint return (or a joint return with the same spouse), you are considered to have received one-half of the advance payment.

Example 1.

You filed a joint return for 2002 and received an advance child tax credit payment (before offset) of $800. You are divorced and filing using head of household status for 2003. You are considered to have received an advance payment (before offset) of $400. When figuring your child tax credit for 2003, enter $400 on line 2 of your Child Tax Credit Worksheet.

Example 2.

You filed a joint return for 2002 with your wife, Jane. You and Jane received an advance child tax credit payment (before offset) of $400. In 2003, you and Jane got divorced. After the divorce became final, you married Mary, with whom you are filing a joint return for 2003. Mary filed using head of household status for 2002 and received an advance child tax credit payment (before offset) of $400. When figuring your child tax credit for 2003, you and Mary enter $600 (Mary's $400 advance payment plus your $200 advance payment) on line 2 of your Child Tax Credit Worksheet. You include $600 on line 2 of the worksheet even if you are claiming only Mary's child.

Offset.

If you owe past-due federal income tax, child support, spousal support, or certain federal nontax debts, such as student loans, all or part of any refund or advance child tax credit payment may be used (offset) to pay the past-due amount. Offsets for federal taxes are made by the IRS. All other offsets are made by the Treasury Department's Financial Management Services (FMS). You will receive a notice from FMS showing the amount of the offset and the agency receiving it.

On line 2 of your Child Tax Credit Worksheet, enter the amount of your advance child tax credit payment before offset.

Taxable Earned Income

You will need to figure your taxable earned income using one of the worksheets in this publication if you are completing the Line 13 Worksheet (page 6) or Form 8812. Form 1040 filers, use the worksheet on page 8 to figure your taxable earned income. Form 1040A filers, use the worksheet on page 9.

Additional Child Tax Credit

This credit is for certain individuals who get less than the full amount of the child tax credit. The additional child tax credit may give you a refund even if you do not owe any tax.

How to claim the additional child tax credit.

To claim the additional child tax credit, follow the steps below.

  1. Make sure you figured the amount, if any, of your child tax credit.
  2. If you answered “Yes” on line 6 or line 7 of the Child Tax Credit Worksheet in the Form 1040 or Form 1040A instructions (or on line 15 of the Child Tax Credit Worksheet in this publication), use Form 8812 to see if you can take the additional child tax credit.
  3. If you have an additional child tax credit on line 13 of Form 8812, carry it to line 65 (Form 1040) or line 42 (Form 1040A).

Child Tax Credit Worksheet. page 1

Child Tax Credit Worksheet. page 1

Child Tax Credit Worksheet. page 2

Child Tax Credit Worksheet. page 2

Line 11 worksheet page 1

Line 11 worksheet page 1

Line 11 worksheet page 2

Line 11 worksheet page 2

1040 Filers – Taxable Earned Income WorksheetKeep for Your Records

Before you begin:  
✓Use this worksheet only if you were sent here from the Line 13 Worksheet on page 6 of this publication or line 4 of Form 8812, Additional Child Tax Credit. ✓Disregard community property laws when figuring the amounts to enter on this worksheet. ✓If married filing jointly, include your spouse's amounts with yours when completing this worksheet.
 
 
1. Enter the amount from Form 1040, line 7 1.  
    Next, if you are filing Schedule C, C-EZ, F, or SE, or you received a Schedule K-1 (Form 1065 or Form 1065-B), go to line 2a. Otherwise, skip lines 2a through 2e and go to line 3.    
2. a. Enter any statutory employee income reported on line 1 of Schedule C or C-EZ 2a.  
  b. Enter any net profit or (loss) from Schedule C, line 31; Schedule C-EZ, line 3; Schedule K-1 (Form 1065), line 15a (other than farming); and Schedule K-1 (Form 1065-B), box 9.* Reduce this amount by any unreimbursed nonfarm partnership expenses you deducted on Schedule E. Do not include any statutory employee income or any other amounts exempt from self-employment tax. Options and commodities dealers must add any gain or subtract any loss (in the normal course of dealing in or trading section 1256 contracts) from section 1256 contracts or related property 2b.  
  c. Enter any net farm profit or (loss) from Schedule F, line 36, and from farm partnerships, Schedule K-1 (Form 1065), line 15a.* Reduce this amount by any unreimbursed farm partnership expenses you deducted on Schedule E. Do not include any amounts exempt from self-employment tax 2c.      
  d. If you used the farm optional method to figure net earnings from self-employment, enter the amount from Schedule SE, Section B, line 15. Otherwise, skip this line and enter on line 2e the amount from line 2c 2d.      
  e. If line 2c is a profit, enter the smaller of line 2c or line 2d. If line 2c is a (loss), enter the (loss) from line 2c. 2e.  
3. Add lines 1, 2a, 2b, and 2e. If zero or less, stop. Do not complete the rest of this worksheet. Instead, enter -0- on line 2 of the Line 13 Worksheet on page 6 or line 4 of Form 8812, whichever applies 3.  
4. Enter any amount included on line 1 that is:            
  a. A scholarship or fellowship grant not reported on Form W-2 4a.      
  b. For work done while an inmate in a penal institution (enter “PRI” and this amount on the dotted line next to line 7 of Form 1040) 4b.      
  c. A pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan (enter “DFC” and this amount on the dotted line next to line 7 of Form 1040). This amount may be shown in box 11 of your Form W-2. If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or annuity. 4c.      
5. a. Enter any amount included on line 3 that is also included on Form 2555, line 41, or Form 2555-EZ, line 18. Do not include any amount that is also included on line 4a, 4b, or 4c above 5a.          
  b. Enter the amount, if any, from Form 2555, line 42, that is also deducted on Schedule C, C-EZ, or F, or included on Schedule E in partnership net income or (loss) 5b.          
  c. Subtract line 5b from line 5a 5c.      
6. Enter the amount from Form 1040, line 28 6.      
7. Add lines 4a through 4c, 5c, and 6 7.  
8. Subtract line 7 from line 3 8.  
   
  • If you were sent here from the Line 13 Worksheet on page 6, enter this amount on line 2 of that worksheet.
  • If you were sent here from Form 8812, enter this amount on line 4 of that form.

    
*If you have any Schedule K-1 amounts and you are not required to file Schedule SE, complete the appropriate line(s) of Schedule SE, Section A. Put your name and social security number on Schedule SE and attach it to your return.  
                 

1040A Filers – Taxable Earned Income WorksheetKeep for Your Records

Before you begin:  
✓Use this worksheet only if you were sent here from the Line 13 Worksheet on page 6 of this publication. ✓Disregard community property laws when figuring the amounts to enter on this worksheet.
 
             
1. Enter the amount from Form 1040A, line 7 1.  
2. Enter any amount included on line 1 that is:        
  a. A scholarship or fellowship grant not reported on Form W-2 2a.      
  b. For work done while an inmate in a penal institution (enter “PRI” and this amount next to line 7 of Form 1040A) 2b.      
  c. A pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan (enter “DFC” and this amount next to line 7 of Form 1040A). This amount may be shown in box 11 of your Form W-2. If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or annuity 2c.      
3. Add lines 2a through 2c 3.  
4. Subtract line 3 from line 1. Enter the result here and on line 2 of the Line 13 Worksheet on page 6 4.  
             

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 35) 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 43) is $2,000.

Steve and Gretchen received an advance payment of the child tax credit in 2003. The amount was $1,600. They also received Notice 1319 indicating $1,600 as the amount of the payment.

Steve and Gretchen have the 2003 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 49 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 4.

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), multiply 4 by $1,000, and enter the result ($4,000) in the box for line 1.
  2. They enter $1,600, the amount of the advance child tax credit payment, in the box for line 2.
  3. They check the “No” box for line 3, subtract the amount on line 2 ($1,600) from the amount on line 1 ($4,000), and enter the result ($2,400) in the box for line 3.
  4. They enter their AGI ($112,000) in the box for line 4.
  5. They enter -0- in the box for line 5 since they did not exclude any income from Puerto Rico or any income on Form 2555, Form 2555–EZ, or Form 4563.
  6. They add $112,000 and $0 and enter the result ($112,000) in the box for line 6.
  7. They enter $110,000 in the box for line 7 since they will file a joint return.
  8. They check the “Yes” box in line 8 since the amount on line 6 ($112,000) is more than the amount on line 7 ($110,000). They subtract line 7 ($110,000) from line 6 ($112,000) and enter the result ($2,000) in the box for line 8.
  9. They multiply the amount on line 8 ($2,000) by 5% (.05) and enter the result ($100) in the box for line 9.
  10. They check the “Yes” box in line 10 since the amount on line 3 ($2,400) is more than the amount on line 9 ($100). They subtract line 9 ($100) from line 3 ($2,400) and enter the result ($2,300) in the box for line 10.
  11. They enter the amount from line 43 of their Form 1040 ($2,000) in the box for line 11.
  12. Steve and Gretchen did not have any of the credits on lines 44, 45, 46, 47, or 48 of Form 1040, so they enter -0- in the box for line 12.
  13. They check the “No” box on line 13 because they are not claiming any of the credits shown on line 13. They enter -0- in the box for line 13.
  14. They subtract the amount on line 13 ($0) from the amount on line 11 ($2,000) and enter the result ($2,000) in the box for line 14.
  15. They check the “Yes” box in line 15 since the amount on line 10 ($2,300) is more than the amount on line 14 ($2,000). They enter the amount from line 14 ($2,000) in the box for line 15. Their child tax credit is $2,000. They enter $2,000 on line 49 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 15.

Steve and Gretchen complete their Form 1040 through line 64 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 10 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 49 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. Before completing line 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 $10,500, they check the “Yes” box and subtract $10,500 from the amount on line 4 ($112,000) and enter the result ($101,500) on line 5.
  6. They multiply the amount on line 5 ($101,500) by 10% (.10) and enter the result ($10,150) 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 ($10,150) 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 65 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 1

Leaf's Child Tax Credit Worksheet page 2

Leaf's Child Tax Credit Worksheet page 2

Leaf's Filled-in Form 8812

Leaf's Filled-in Form 8812

Paperwork Reduction Act Notice.

We ask for the information on the worksheets in this publication to carry out the Internal Revenue laws of the United States. You are required to give us the information if requested. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax.

You are not required to provide the information requested on a form (or worksheet in this publication) that is subject to the Paperwork Reduction Act unless the form (or publication) displays a valid OMB control number. Books or records relating to a form, its instructions, or this publication must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103.

The time needed to complete and file the worksheets in this publication will vary depending on individual circumstances. The estimated average time is:

Recordkeeping 12 min.
   
Learning about the law or the worksheets 8 min.
   
Preparing the worksheets 1 hr., 14min.
If you have comments concerning the accuracy of these time estimates or suggestions for making these worksheets simpler, we would be happy to hear from you. See Comments and suggestions, earlier.

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 independently 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 toll free 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.
  • Visit the web site at www.irs.gov/advocate.

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.

Access by computer

Internet. You can access the IRS web site 24 hours a day, 7 days a week at www.irs.gov to:

  • E-file. Access commercial tax preparation and e-file services available for free to eligible taxpayers.
  • Check the amount of advance child tax credit payments you received in 2003.
  • Check the status of your 2003 refund. Click on “Where's My Refund” and then on “Go Get My Refund Status.” Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically) and have your 2003 tax return available because you will need to know your filing status and the exact whole dollar amount of your refund.
  • Download forms, instructions, and publications.
  • Order IRS products on-line.
  • See answers to frequently asked tax questions.
  • Search publications on-line by topic or keyword.
  • Figure your withholding allowances using our Form W-4 calculator.
  • Send us comments or request help by e-mail.
  • Sign up to receive local and national tax news by e-mail.
  • Get information on starting and operating a small business.

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

Request information by fax

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  • Ordering forms, instructions, and publications. Call 1–800–829–3676 to order current-year forms, instructions, and publications and prior-year forms and instructions. You should receive your order within 10 days.
  • Asking tax questions. Call the IRS with your tax questions at 1–800–829–1040.
  • Solving problems. You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Call your local Taxpayer Assistance Center for an appointment. To find the number, go to www.irs.gov or look in the phone book under “United States Government, Internal Revenue Service.”
  • TTY/TDD equipment. If you have access to TTY/TDD equipment, call 1–800–829– 4059 to ask tax or account questions or to order forms and publications.
  • TeleTax topics. Call 1–800–829–4477 to listen to pre-recorded messages covering various tax topics.
  • Refund information. If you would like to check the status of your 2003 refund, call 1–800–829 4477 for automated refund information and follow the recorded instructions or call 1–800–829–1954. Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically) and have your 2003 tax return available because you will need to know your filing status and the exact whole dollar amount of your refund.

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.

Request most forms at post offices and libraries.

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

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  • Services. You can walk in to your local Taxpayer Assistance Center every business day to ask tax questions or get help with a tax problem. An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. You can set up an appointment by calling your local Center 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. To find the number, go to www.irs.gov or look in the phone book under “United States Government, Internal Revenue Service.”

Envelope

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Request information on CDROM

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

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  • Frequently requested tax forms that may be filled in electronically, printed out for submission, and saved for recordkeeping.
  • Internal Revenue Bulletins.

Buy the CD-ROM from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders for $22 (no handling fee) or call 1–877–233–6767 toll free to buy the CD-ROM for $22 (plus a $5 handling fee). The first release is available in early January and the final release is available in late February.

Request information on CDROM

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 early April. You can get a free copy by calling 1–800–829–3676 or by visiting the web site at www.irs.gov/smallbiz.

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