Children are expensive, even if they're blessed with straight teeth. It's not surprising that millions of parents are eager to take advantage of the child tax credit, which is worth up to $1,000 per eligible child in 2003, up from $600 in 2002.

A large credit can significantly reduce your taxes and fatten your refund. Unlike deductions, tax credits come right off the top of your taxbill.

But claiming the right amount won't be easy for many taxpayers, tax preparers say.

"On the surface of it, it seems so simple, yet there are lots of complexities," says Kathy Burlison, a tax specialist for H&R Block. Potential pitfalls:

Claiming too much

The larger credit was included in the $350 billion tax cut, signed into law last May. In an effort to pump more money into the economy, lawmakers decided to send about 25 million taxpayers an advance on the 2003 credit, worth up to $400 per child. Most of the checks were mailed in July and August.

If you received an advance payment, you must subtract it from the full child tax credit when you do your 2003 tax returns.

Report the amount of your advance on Line 2 of the worksheet that's in the instructions for Form 1040 and 1040A. Use the rest of the worksheet to calculate your credit.

Most taxpayers who were eligible for the advance payment received a notice from the IRS shortly before they got their check. Use this document, titled IRS Notice 1319, to fill in the worksheet.

If you can't find the notice, you can get the information from the IRS Web site, www.irs.gov. Click on "Your 2003 Advance Child Tax Credit."

You'll need to type in your Social Security number, your 2002 filing status — such as single or married filing jointly — and the number of exemptions you claimed on your 2002 tax return. Make sure you type in exemptions, not dependents, or the program won't work, Burlison says.

When you file your tax return, the IRS will match it against its records of advance payments. If you received a check and fail to subtract it from your credit, the agency's computers will kick out your return so the IRS can correct the error.

Your refund will be reduced, and probably delayed.

Claiming too little

If you're a new parent and meet the other eligibility requirements for the tax credit, it's payback time.

Enter "0" on Line 2 of the worksheet and calculate your credit using the full $1,000 amount.

Divorced parents who take turns claiming children as dependents on their tax returns may also be eligible for the full credit.

For example, suppose a mother claimed a child on her tax returns in 2002, and the father has the right to claim him in 2003.

Because the mother claimed the child in 2002, she would have received the advance payment, even though she's ineligible for the credit in 2003. The father will be able to claim the full credit on his 2003 tax returns.

The mother, meanwhile, will be allowed to keep the check. The IRS says it won't force taxpayers who received an advance payment to return the money, even if it turns out they're ineligible for the tax credit in 2003.

For example, if your income rose in 2003, making you ineligible for the credit, you don't have to return your advance payment.

"If you got a check you weren't entitled to, you get to keep it," says Joe Schwartz, a tax preparer in Santa Rosa, Calif.

Don't ignore offsets

If you owed back taxes or child support, the IRS may have used some or all of your advance payment to pay off those debts. But when you fill out the worksheet, you must subtract the amount of your payment before those deductions, known as offsets.

An offset is considered a benefit to you because the money was used to pay your debts, the IRS says.