The parent who claims the dependency exemption for a child under age 17 is entitled to claim the child tax credit. Until 2008, the credit will be $700; in 2009, $800 and; in 2010, and thereafter, $1,000.

However, the child tax credit is phased out for taxpayers with certain adjusted gross incomes. For married taxpayers filing joint returns, the phase out begins at $110,000, with complete phase out at $124,000. For married taxpayers filing separate returns, the phase out begins at $55,000, with complete phase out at $69,000.

For unmarried/head of household taxpayers, the phase out begins at $75,000, with complete phase out at $89,000.

When parents separate, the custodial parent has the right to claim the dependency exemption for a child, and therefore the child tax credit, unless the custodial parent transfers the exemption to the non-custodial parent.