• Justin Howe

Your Kid's Tax Credit is Now Worth More


Changes to the child tax credit are coming this year under the new Tax Cuts and Jobs Act (TCJA). The TCJA eliminates the dependent exemption but, retains the definition of dependent to claim the child tax credit and other child- or dependent-related tax benefits. This will typically mean that the child must be under 17 years old on December 31, 2018, be related to the taxpayer, live in the taxpayer’s home more than half the year, and not provide more than half of his or her own support. Special rules apply if the parents are divorced or legally separated.


The major changes involve the size of the credit and the refundable amount. In 2018, the child tax credit is worth up to $2,000 per qualifying child with the refundable portion limited to $1,400.(up from $1,000 per child in 2017). Individuals claiming the credit must have an earned income of at least $2,500 (down from $3,000). The credit will still phase out but, the threshold has increased to $200,000 for individuals and $400,000 for joint filers.

In addition to these changes, the TCJA created a new, nonrefundable $500 "family credit" for other dependents that do not qualify for the child tax credit. Dependents that might qualify for this credit include aging parents or children over 17 that you support.

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