Credits

You cannot claim the credit if the person(s) who made the qualified contribution or elective deferral (a) was born after January 1, 1994, (b) is claimed as a dependent on someone else’s 2011 tax return, or (c) was a student.

Contributions designated under section 414(h)(2) are treated as employer contributions and as such they are not voluntary contributions made by the employee. They do not qualify for the credit and should not be included on Form 8880, line 2.

A qualifying child for purposes of the child tax credit is a child who is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your grandchild, niece, or nephew) and
was under age 17 at the end of the current year,
Did not provide over half of his or her own support for the current year,
Lived with you for more than half of the current year
Is claimed as a dependent on your return,
Does not file a joint return for the year
Was a U.S. citizen, a U.S. national, or a U.S. resident alien.

Only those families that make less than $110,000 annually are eligible for the full credit. Families making between $110,00 and $130,000 receive a reduced credit (specifically $50 per $1,000 made over $110,000). Individuals who are unmarried must have earned under $75,000 to qualify for this credit. Taxpayers who are married but filing separate returns must have made no more than $55,000.

They must not have reached the age of 17 by the end of the tax year.
Children may be your blood children, grandchildren, step children, and / or adopted children. Foster children also fall under this category as long as they have lived in your home for the entire year in question.
Qualifying children must be citizens or residents of the United States who can be claimed as dependents by the taxpayer.

If the Child Tax Credit is larger than your tax liability, the unused part of the Child Tax Credit can be refundable as an additional Child Tax Credit.
The portion that is available for a refund depends on the number of children you have, your total earned income, and, sometimes, the amount of taxes you have paid over the year to Social Security and Medicare.
Use Form 8812 to claim the Additional child Tax Credit.

Parents in the process of a domestic U.S. adoption, and who do not have the child's Social Security number, should request an Adoption Taxpayer Identification Number by using IRS Form W-7A. Form W-7A is the Application for Taxpayer Identification Number for Pending Adoptions. To get this form you should go to either the IRS website, a local IRS office or call 1-800-829-3676.

If you are unsure, it may be safer to file long Form 1040. You may use Form 1040EZ and claim the earned income credit, but there are several requirements that need to be met to use the short form 1040EZ. Read the instructions for Form 1040EZ or speak to your local CPA for assistance.

The amount of foster parent expenses that exceed the payments from a state agency can be deducted as a charitable contribution on IRS Schedule A.