One of the news headlines about the 2017 Tax Cuts and jobs Act was the elimination of personal exemptions, which took away a $4,050 tax deduction for each taxpayer, spouse and qualified dependent. Families with several children were pretty unhappy to hear about losing that hefty tax deduction, and even unhappier to wait for the IRS regulations to understand how this change would impact their tax bill.
Well, the wait is over. In November 2018, the IRS issued notices and regulations to clarify the new tax law regarding the Child Tax Credit, the Additional Child Tax Credit, and the new Credit for Other Dependents. Here are the details you’ll need to understand for your 2018 income tax return:
- Child Tax Credit
Beginning in 2018, you may able to claim the Child Tax Credit if you have a qualifying child under the age of 17 and meet other qualifications, like the tests for support and residency. The maximum amount for the Child Tax Credit is $2,000 per qualifying child. Each qualifying child must have a Social Security Number issued by the Social Security Administration before the tax return due date, including extensions.
- Additional Child Tax Credit
Qualifying taxpayers may take up to $1,400 of an Additional Child Tax Credit for each qualifying child under the age of 17. This credit is refundable, meaning that the credit may give you a refund even if you don’t owe any federal taxes.
- Credit for Other Dependents
Dependents who can’t be claimed for the Child Tax Credit may still qualify for the Credit for Other Dependents of up to $500. Examples include children 17 years of age or older or parents for whom you provide 50% or more of financial support. This credit is non-refundable, meaning that it can only be used to offset tax liability. No refund is provided if taxes are not due or the credit is greater than the taxes due.
Not sure if your dependents qualify you for the Child Tax Credit, the Additional Child Tax Credit, or Credit for Other Dependents? The IRS has you covered. Use their Interactive Tax Assistant to see if you’re eligible.