The child tax credit is one of the many things that has changed since the new tax laws were implemented. This is great news for the people who claim the child tax credit to help with the cost of raising their children.

What are some of the changes and how can it affect you?

The new law increased the child tax credit from $1,000 to $2,000 per qualifying child. Of course, the eligibility factors for the credit have not changed. Taxpayers can claim the credit if:

  • The child is your son/daughter, stepchild, eligible foster child, brother/sister, stepbrother/stepsister, half brother/sister, or a descendant of any of them
  • The child was younger than 17 at the end of the year
  • The child did not provide over half of their support for 2018
  • The child is claimed as a dependent
  • The child lives with the taxpayer for at least six months of the year
  • The child does not file a joint return for the year (or files only to claim refund)
  • The child was a US citizen, US national, or US resident alien

One of the best things about the new tax credit is that the threshold amount for the limitation based on adjusted gross income has increased to $400,000 in the case of a joint return and $200,000 for all other returns. Now, more families with children 17 and younger qualify for the larger tax credit.

The earned income threshold has also been modified. The earned income threshold has been lowered to $2,500 per family, which means that a family must earn at least $2,500 in order to claim the credit.

The credit is also refundable, and now the refund amount has been increased to $1,400. As long as the taxpayer does not owe any tax before claiming the credit, they will be able to receive the full $1,400 as part of their tax refund.

There are now other credits that can be claimed for other dependents as well. For those who cannot be claimed for the child tax credit, they may still qualify for the new credit for other dependents. This is a non-refundable credit up to $500 for each eligible dependent. Those who qualify for this credit include dependent children who are 17 or older at the end of the year, parents, or other qualifying relatives supported by the taxpayer.

The child tax credit is figured using the Child Tax Credit and Credit for Other Dependents Worksheet.  To claim the child tax credit, your qualifying child must have the required SSN. If you have a qualifying child who was not issued an SSN valid for employment before the due date of your 2018 return (including extensions), you cannot use the child to claim the child tax credit on either your original or an amended 2018 return. 

 

The above information is of a general nature only and should not be relied upon for specific situations. Click here for additional tax services information.

Call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730 as required to set up an appointment.