Military Taxes: Family/Spouse Issues

Military families must contend with moving and child care issues -- and both of these issues can be very expensive. However,  Permanent Change of Station (PCS) and the Child Tax Credits can help ease the financial strain of frequent moves and raising children.

Moving Expenses
For more information on moving expenses and their tax implications, jump to the section on moving.

Child Tax Credit
The child tax credit is a credit that can reduce your tax. If you have children, you may be able to take a child tax credit on your tax return for each of your qualifying children.

The child tax credit is not the same as the credit for child and dependent care expenses. See Publication 503 for more information on the credit for child and dependent care expenses.

Qualifying Child
A qualifying child for purposes of the child tax credit must be all of the following.

• Under age 17 at the end of 2009
• A citizen or resident alien of the United States
• Claimed as your dependent
• Your:
  
  • Son or daughter, or
  • Stepson or stepdaughter, or
  • Adopted child, or
  • Grandchild, or
  • Eligible foster child
  • Brother, sister, stepbrother, or stepsister; a descendent (such as a child including an adopted child) of your brother, sister, stepbrother, or stepsister;
  • A child who was born or died in 2009 is considered to have lived with you for all of 2009 if your home was the child's home for the entire time he or she was alive during 2009.

• Your tax liability is less than the credit, or
• Your modified 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

• Any amount excluded from income because of the exclusion of income from Puerto Rico.
• Any amount on lines 43 and 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.

• Make sure you figured the amount, if any, of your child tax credit.
• Use Form 8812, Additional Child Tax Credit, to see if you can take the additional child tax credit only if you answered "Yes "on line 4 or line 5 of the Child Tax Credit Worksheet.
• 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).