With the dependent exemptions off the table for 2018, there is some relief found in the changes to the Child Tax Credit. Under TCJA the credit amount, and refundable portion amounts were increased and became inclusive of other types of dependents. AGI (adjusted gross income) phase out ranges are also increased which widens availability for taxpayers who qualify for the credit. The new 2018 tax rules are as follows:

  • Credit amounts have doubled to $2,000 per qualifying child;

  • Up to $1,400 of the $2,000 credit for qualifying child is refundable when the taxpayer does not completely use the entire $2,000 to offset their tax liability;

  • For dependents who do not meet the qualifying child requirements, taxpayers can claim a credit of $500 per dependent;

  • No part of the $500 credit is refundable;

  • For joint filers the phase out of the credit amount starts at $400,000 of modified adjusted gross income, up from just $110,000 last year. For all other taxpayers the phase out begins at $200,000, up from $55,000 for married filing separate and $75,000 for all others in 2017.

To note, a qualifying child must meet the following guidelines:

- Your child, or descendant of your child; sibling or stepsibling; descendant of sibling or stepsibling;

-They must be under the age of 17;

- You must provide the primary residence for more than half the year for the child and more than half of their financial support for the year; and

-For other dependents, the rules remain the same with the exception of the age limitation.

 

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.