You might be seeing some more money on your tax refund this year, and that could all be due to the newly-revised Child Tax Credit. The Tax Cuts and Jobs Act increased the amount of the Child Tax credit and also created a smaller tax credit that would help people taking care of older children or relatives. There are still requirements you must meet to qualify for the tax credit.
Child Tax Credit
The Child Tax Credit was created in 1998, where families could take up to $400 tax credit for each qualifying child under 17. Before the Tax Cuts and Jobs Act, the maximum tax credit you could take was $1,000 for each qualifying child. Now the tax credit has doubled for parents. The Child Tax Credit is now worth $2,000 per child. Along with doubling how much the tax credit is worth, the tax reform increased the income limit placed on the credit, allowing more families to qualify for the important tax credit. The phase out for the tax credit begins now at $200,000 for single filers or $400,000 for married couples that file together. Up to $1,400 of the credit can be refundable for each qualifying child. This means along with cutting down the taxes you owe, you could also receive a tax refund!
How to Qualify for the Child Tax Credit
For families to be eligible to claim the new Child Tax Credit, the child must be younger than 17 at the end of the tax year. The child must also be claimed as a dependent on your tax return, they must live with you for more than six months out of the tax year and have a valid Social Security Number before the due date of the tax return or extension. The child cannot provide more than half of his or her own financial support during the tax year you are claiming them. The child must also be a U.S. citizen, a U.S. national, or a U.S. resident alien.
The new tax law also created a new credit for dependents that might not meet the qualifications of the Child Tax Credit. This tax credit is for taxpayers that support dependents that are over the age of 17 or other relatives. This new credit will allow taxpayers to take a credit up to $500 per dependent.
Confused by all the different tax deductions and tax credits? That’s okay, the average taxpayer doesn’t know all the tax deductions available to them and that’s why we are here! Polston Tax has a team of tax attorneys, CPAs, and tax accountants that cannot only help you file your yearly tax returns, but also help you decide which tax credits are best for you. Call us today at 844-841-9857 or click below to schedule a free consultation.