For tax years 2017-2026, the Tax Cuts and Jobs Act (hereafter referred to as TCJA) doubles the maximum Child Tax Credit (CTC) from $1,000 to $2,000 per qualifying child. The TCJS also increases the amount you can receive for dependents who aren’t qualifying children under 17. This is a huge deal for anyone with young dependents. Here are some clarifications on the terms and importance of this change:
What is a Qualifying Child?
• Is of direct relation
• Lives with you
• Is under 17
• Does not provide more than half of their income
• Is unmarried
This is a simplified version. If you have more interest in exactly what this means, click here.
Old Child Tax Credit
Max CTC of $1,000.
Reduced credit for high income earners.
Nonrefundable that could only offset regular and alternative minimum tax, but you could transform it into the refundable Additional Child Tax Credit (ACTC) for up to 15% of your income, that exceeded $3000.
You needed to have a Taxpayer Identification Number which could be a social security number (SSN), or an individual taxpayer identification number (ITIN), or an adoption taxpayer identification number (ATIN).
New Child Tax Credit
Increases the max CTC from $1,000 to $2,000.
Less reduction for high income earners.
To get the maximum allowable you need to include your child’s social security number. If you can’t qualify for the max, there is a new partial CTC. This partial CTC only goes up to $500. This partial, however, does apply to a non-qualifying child.
ACTC is refundable for 15% of more than $2,500, for the year up to $1400.
If you want to learn more, check out H&R block’s article.
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