Under the American Recovery and Reinvestment Act (ARRA), more families will be eligible for the additional child tax credit because of a change in the way the credit is figured. The child tax credit is for those who have one or more qualifying child(ren) but earn only a modest income. The credit is $1000 per dependent child (under 17) who lived with you for more than half of the year. The credit is first applied to tax due. The balance is refundable.
ARRA reduces the minimum earned income amount to $3,000. Before ARRA, the minimum earned income amount was set to rise to $12,550. By reducing the amount to $3,000 more taxpayers will qualify to use the additional child tax credit. For this purpose earned income includes only taxable earned income, and nontaxable combat pay. The credit phases out when AGI reaches $75K for single & head of household, $110K for married filing joint.
This change applies to tax years beginning in 2009 and 2010, and you must file a 1040 or 1040A to claim the credit.
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The Standard Disclaimer: The foregoing discussions of the American Recovery & Reinvestment Act are offered for informational use only and do not constitute tax advice. | 
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