How to Claim the Montana Child Tax Credit
Reduce your Montana state tax liability with the new Child Tax Credit. This guide details the specific income, residency, and age requirements for families.
Montana has introduced a new state-level tax benefit, the Montana Child Tax Credit, available for the 2024 tax year. This credit provides financial relief to families with young children residing in the state. It operates separately from the federal Child Tax Credit and has its own distinct set of rules for eligibility and calculation.
Eligibility for the Montana Child Tax Credit
To qualify for the Montana Child Tax Credit, a taxpayer must meet requirements concerning the child, residency, and income. The first condition is having a qualifying child who is 5 years of age or younger at the close of the tax year. The child must also be the taxpayer’s legal dependent and have a valid Social Security number.
A second requirement is that the taxpayer must have been a Montana resident for the entire tax year. Part-year residents are not eligible to claim the credit, even if they meet the other criteria.
The final eligibility factor is based on the taxpayer’s federal Adjusted Gross Income (AGI). The credit is not available to taxpayers whose AGI exceeds $50,000. This income threshold applies regardless of filing status and is the same for individuals, heads of household, and joint filers. Taxpayers must also have investment income of less than $10,300 to be eligible.
Calculating Your Credit Amount
The maximum credit amount available is $1,200 per qualifying child. A family with two eligible children, for instance, could claim a credit of up to $2,400. This amount is subject to a phase-out based on income, and the credit is reduced by $90 for every $1,000 that a taxpayer’s federal AGI is over the eligibility threshold.
This credit is refundable. A refundable credit can lower a taxpayer’s tax liability to zero, and any remaining credit amount is paid out as a refund. For example, if a family’s calculated credit is $1,200 but their Montana income tax liability is only $800, the credit will first eliminate the $800 tax bill. The remaining $400 is then returned to the taxpayer as a refund.
How to Claim the Credit on Your Tax Return
Claiming the Montana Child Tax Credit requires completing a specific form with the annual state income tax return. Taxpayers must fill out the Montana Child Tax Credit Schedule. This schedule is where the details of the qualifying children are listed, including their names and Social Security numbers.
Once completed, this schedule must be attached to the taxpayer’s primary Montana income tax return, Form 2. The total calculated credit amount from the Montana Child Tax Credit Schedule is then transferred to the appropriate line on Form 2. Taxpayers should review the instructions for Form 2 to find the specific line for reporting this credit.