Tax Credits for a Child | Chandler and Knowles CPA

It’s everyone’s favorite time of year - tax return season! Do you know how President Trump’s 2018 tax reform is going to affect you if you are a parent claiming dependents on your taxes? If you have young children or other dependents, there is a good chance you are eligible for the Child Tax Credit. This credit could reduce your federal income tax bill by up to $2000 per child for the 2018 tax year (what you’re filing in 2019).

The Child Tax Credit (CTC) is designed to give an income boost to parents or guardians of children or dependents. To claim the Child Tax Credit, however, you first must determine if your child is eligible or not.

How to Determine Who Qualifies

There are seven qualifying requirements to consider and you and your child/dependent must meet all seven to claim this tax credit.

Age

The child/dependent must have been younger than 17 at the end of the tax year that you are claiming credit for.

Relationship

The child/dependent must be your own child, a stepchild, or a foster child placed with you by a court or authorized agency. An adopted child is always treated as your own child, even if the adoption is not final by the end of the tax year. You can also claim siblings and step-siblings, nieces, nephews, and grandchildren if they meet all the other requirements.

Dependent

You must claim the child as a dependent on your tax return.

In order for you to claim a child as a dependent, they must:

1. Be your child (or adoptive or foster child), sibling, niece, nephew or grandchild

2. Be under age 19, or under age 24 and a full-time student for at least five months of the year; or be permanently disabled—regardless of age

3. Have lived with you for more than half the year

4. Have provided no more than half of his or her own support for the year.

The child/dependent must be a U.S. citizen, a U.S. national, or a U.S. resident alien.

Important exceptions include:

1. A child who was born (or died) during the tax year is considered to have lived with you for the entire year.

2. Temporary absences by you or the child for special circumstances, such as school, vacation, business, medical care, military services, or detention in a juvenile facility are counted as time the child lived with you.

The Child Tax Credit is reduced if your Modified Adjusted Gross Income is above certain amounts. These amounts are determined by your tax-filing status. For every $1000 of income above the threshold amount, your available Child Tax Credit is reduced by $50.

Our Tax Return Services

Eligible filers can claim the CTC on form 1040, line 12a or on form 1040NR, line 49.  The IRS offers the Child Tax Credit to help parents and guardians balance out the cost of raising a family. To further learn how you can save on this year’s taxes, chat with any one of our friendly and knowledgeable team members. We would be thrilled to assist you in your tax filing and get you all the deductibles you deserve. Contact us for more information.