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The Child Tax Credit

A Tax Break for People Who Have a Qualifying Child

One of the most valuable and popular federal tax credits is the Child Tax Credit.

Starting with tax year 2018, the Child Tax Credit is worth up to $2,000 per qualifying child.

What Is a Qualifying Child?

You may be eligible for the Child Tax Credit if you have a qualifying child under age 17 and you meet other IRS requirements. The maximum amount allowed for this tax credit is $2,000 for each qualifying child.

If you want to claim the Child Tax Credit, your qualifying child must have a Social Security Number (SSN) that was issued by the Social Security Administration before the due date of your income tax return. This requirement is also true for the Additional Child Tax Credit. Children with an ITIN (Individual Taxpayer Identification Number) cannot be claimed for either child tax credit.

In general, a person is considered your “qualifying child” for the purposes of this tax credit if all of the following apply:

  • He/she is closely related to you (e.g., your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, grandchild, nephew, or niece)
  • He/she was under age 19 at the end of 2018 and younger than you (or your spouse if Married Filing Jointly), or he/she was a student under age 24 at the end of 2018 and younger than you (or your spouse if Married Filing Jointly), or he/she is any age and diagnosed as permanently and totally disabled
  • He/she did not provide more than half of his/her own support for 2018
  • He/she is not filing a joint tax return for 2018, or is filing a joint return only to claim a tax refund for withheld income tax or estimated tax paid
  • He/she lived with you for over half of 2018

For a full list of requirements, see the Instructions for IRS Form 1040.

You can use the IRS online tool to see if you’re able to claim this tax break: Does My Child/Dependent Qualify for the Child Tax Credit?

Are There Income Limits?

For tax year 2018, the maximum credit is $2,000 per qualifying child. But you should also note that up to $1,400 of the credit (per qualifying child) is refundable as the Additional Child Tax Credit. A refundable tax credit can reduce your tax liability below zero, resulting in a tax refund for you.

There are some limits to how much you can claim for the Child Tax Credit if your income is above a certain level, based on your filing status. The credit begins to phase out at $200,000 of modified adjusted gross income for single taxpayers – or $400,000 for married couples filing jointly. (Compare this to the 2017 phaseout levels of $75,000 for single filers and $110,000 for married couples filing joint returns.)

The new higher income thresholds were instituted to allow more taxpayers to benefit from the Child Tax Credit. These phaseout levels also apply to the Credit for Other Dependents (see below).

How Do I Claim the Child Tax Credit?

The IRS recently overhauled the individual income tax return and released a draft version of the new Form 1040. This means that many taxpayers will have to re-learn how to claim the Child Tax Credit on their federal return.

There are currently two sections where you report information about your qualifying child (a.k.a. dependent) and claim the Child Tax Credit – the front and the back of Form 1040.

On the front of Form 1040, you enter information about your dependents. If your dependent qualifies for the Child Tax Credit, you should check the corresponding box:

child tax credit form 1040 report dependent front

On the back of Form 1040, you enter the amount you are claiming for the Child Tax Credit on Line 12 (a):

child tax credit form 1040 report dependent back

For detailed line-by-line guidance, see the Instructions for IRS Form 1040.

What About the Additional Child Tax Credit?

There have been some recent changes to the Additional Child Tax Credit (ACTC) as well. Prior to tax year 2018, the Child Tax Credit was non-refundable with a $1,000 maximum, and the Additional Child Tax Credit was used to help parents/guardians claim a portion of the Child Tax Credit and make it refundable. However, beginning with tax year 2018, the Additional Child Tax Credit is no longer a separate credit from the Child Tax Credit.

Instead, the maximum Child Tax Credit amount is currently $2,000 per qualifying child – and up to $1,400 of the credit (per qualifying child) is now refundable as the Additional Child Tax Credit. Remember that a refundable tax credit can reduce your tax liability below zero, resulting in a tax refund.

Similar to the Child Tax Credit, the Additional Child Tax Credit also now requires your qualifying child to have a Social Security Number (SSN) that was issued by the Social Security Administration before the due date of your income tax return. This means that children who have an ITIN (Individual Taxpayer Identification Number) do not qualify for this tax credit.

You should use IRS Schedule 8812 (Form 1040) to calculate and claim the Additional Child Tax Credit.

NEW: Tax Credit for Other Dependents

If you have a dependent person who doesn’t qualify for the Child Tax Credit, he/she may still qualify you for the new “Credit for Other Dependents.” This non-refundable tax credit is worth up to $500 for each qualifying dependent (other than children who can be claimed for the Child Tax Credit). To be eligible for this credit, the dependent must be a U.S. citizen, U.S. national, or U.S. resident alien.

The Credit for Other Dependents is calculated and reported with the Child Tax Credit on your Form 1040. Note that there is a phaseout limit if your adjusted gross income (AGI) exceeds $200,000 for single taxpayers (or $400,000 for married filing jointly).

For more information, see IRS Publication 5307 (Tax Reform Basics for Individuals and Families).


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