Jack is 100% correct!! Be sure to follow the instructions for the 1040 series forms to get this credit. Like the EIC, it can generate a refund, even if you owe no taxes. If you have any questions about this, or any tax matter, call 800-829-1040.
You can take the deduction for your children as long as the child was under age 17 at the end of 2007. You can visit IRS.gov for the tax code as this is a federal filing rule and not state, so Indiana really doesn't come in to play. There are various qualifies, so feel free to browse the attached link.
The child tax credit is an extra $1,000 reduction in your taxes per eligible child. If you do not have enough taxable income, and therefore not enough taxes to reduce, the Additional Child Tax Credit may apply to you. The additional child tax credit may give you a refund even if you do not owe any taxes.
Your dependents have to have been 17 at the end of 2007. You would then be entitled to the 1K deduction per child to reduce your tax. You have to meet eligibility requirements. IRS.GOV can give you more info.
The $1,000 per child can only reduce your tax. The additional child tax credit is what's refundable if you are eligible for it. Go to IRS. You may also want to consult Publication 972 and form 8812 to figure the additional child tax credit if you are eligible for it.