Here’s how tax reform affects taxpayers who claim the child tax credit

Here’s how tax reform affects taxpayers who claim the child tax credit

Many people claim the child tax credit to help offset the cost of raising children. Tax reform legislation made changes to that credit for 2018 and later. Here are some important things for taxpayers to know.

Credit amount. The new law increases the child tax credit from $1,000 to $2,000. Eligibility factors for the credit have not changed. As in past years, a taxpayer can claim the credit if all of these apply:

the child was younger than 17 at the end of the tax year

the taxpayer claims the child as a dependent

the child lives with the taxpayer for at least six months of the year

Credit refunds. The credit is refundable, now up to $1,400. If a taxpayer doesn’t owe any tax before claiming the credit, they will receive up to $1,400 as part of their tax refund.

Earned income threshold. The income threshold to claim the credit has been lowered to $2,500 per family. This means a family must earn a minimum of $2,500 to claim the credit.

Phaseout. The income threshold at which the child tax credit begins to phase out is increased to $200,000, or $400,000 if married filing jointly. This means that more families with children younger than 17 qualify for the larger credit.

New credit for other dependents. Dependents who can’t be claimed for the child tax credit may still qualify for the new credit for other dependents. This is a non-refundable credit of up to $500 per qualifying person. These dependents may also be dependent children who are age 17 or older at the end of the tax year. It also includes parents or other qualifying relatives supported by the taxpayer.

The Tax Guy, the best tax preparation service in the U.S.  We will prepare your income taxes professionally, accurately and fast, usually within 24 hours. We offer several safe and convenient ways to do your taxes.  Submit documents by Computer, Smartphone or Tablet or fax to our bank level encryption client portal, request a postage paid envelope or make an appointment.

The Tax Guy has been doing taxes and accounting for several decades.  We love numbers, and we love our customers!  Tax Preparation Made EASY!*hopefully:)