CHILD TAX CREDIT DOUBLED

Potential to Reduce Your Tax Bill
by as Much as $2,000 per Qualifying Child

Raising children is an expensive responsibility. So it’s worth your while to take just a few minutes to see if you may qualify for relief under the Child Tax Credit (CTC). The CTC has been expanded under the new tax law enacted last year. Chief among the enhanced benefits is an increase of 100% which raises the credit from $1,000 to $2,000 per qualifying child.

We’ll take a look at the criteria to determine a child’s qualifications in a moment.  But first a word about tax credits. The best way to describe tax credits is in contrast to what most taxpayers understand … tax deductions. When compared to tax deductions, tax credits yield the better tax savings. Tax deductions reduce the amount of your income subject to tax. Tax credits directly reduce your tax bill.

For example, assume you spend $2,000 that results in a tax deduction. That will reduce your taxable income by $2,000. In a 25% tax bracket, you would save $500 in taxes.

Now compare that with a $2,000 tax credit. That amount is subtracted from the amount of tax owed as opposed to an offset to income … as is the case with a tax deduction. Result: Your tax bill is reduced by the full $2,000 tax credit! In the above example, the tax credit increases tax savings by 400%

Taxpayers, businesses and individuals, find tax credits trump tax deductions every time in saving tax dollars.

Qualifying for the Child Tax Credit

As mentioned above, you may be eligible to claim a tax credit that will reduce your tax by as much as $2,000 per qualifying child. Additionally, if you do not qualify for the full amount, you may be able to take the refundable additional child tax credit. The basic criteria to determine a child’s qualifications are:

Your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew);

• Was under age 17 at the end of 2018;
• Did not provide over half of his or her own support for 2018;
• Lived with you for more than half of 2018;
• Is claimed as a dependent on your return;
• Does not file a joint return for the year; and
• Was a U.S. citizen, a U.S. national, or a resident of the United States. If the child was adopted, see Adopted child .

Check out this link f you still have questions whether your child is a Qualifying Child for the CTC?

 Note: If you have at least one child that qualifies for the CTC, you may also be eligible for the Additional Child Tax Credit if you get less than the full amount of the CTC.

Notably, if you don’t owe any tax before claiming the credit, you may receive up to $1,400 in credit refunds.

Your family income must be a minimum of $2,500 to claim the credit.

As your income increases, the child tax credit begins to phase out. The phase-out trigger 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.

Dependents who can’t be claimed for the child tax credit may still qualify the taxpayer for the credit for other dependents. The new tax law creates a non-refundable Family Tax 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 2018. It also includes parents or other qualifying relatives supported by the taxpayer.

Clearly, this may be a complicated series of qualifications to decipher. If you even think you may qualify, give us a call to discuss and determine what you may expect in tax credits.