Traverse City MI - First introduced in 1997, the child tax credit (CTC) was a simple non-refundable credit for $400 and it applied to each qualifying child below the age of 17. Over the last 20years, a lot has changed with the child tax credit. But what makes the new Child Tax Credit any different from those from the previous years? American Tax service, an online tax information and advice blog recently published a post that reveals everything you need to know about the new 2018 child tax credit.
In the new post, the American Tax service highlights some of the key changes made by The Tax Cuts and Jobs Act (TCJA) as:
• Higher Amount – Each qualifying child under 17 is now worth $2,000 to families.
• Refundable – Now the refundable part of the tax credit is limited to just $1,400. Following 2018, this limit will be adjusted according to inflation.
• Earned Income – This threshold has been limited to $2,500.
• Credit Phase out – The credit phase out limit now begins at $200,000, or double if filing jointly. It also applies to the additional $500 credit for any other dependents in a household.
• Social Security Number – Each qualifying child must have a social security number to qualify.
The rules have also changed on taxpayers who could claim both the child’s dependent exemption and the CTC. With the new TCJA legislation, the dependent legislation has been eliminated. This implies that the taxpayer must be related to the child and must live in the taxpayer's house for at least half of the year and they can’t provide more than half of their own support. All changes made to the child tax credit will be valid until the end of 2025.
Despite all these changes, taxpayers can easily claim the child tax credit if they file using the H&R Block Online. They will only need to make sure that the child is considered a qualifying child and is listed as a dependent on Form 1040.
For more detailed information about the new 2018 Child Tax Credit, please visit, https://americantaxservice.org/new-child-tax-credit
American Tax Service
945 East 8th Street Suite A
Traverse City, Michigan 49686