For the 2018 tax year, the CTC was increased to a $2,000 maximum credit per qualifying child. This credit can go towards lowering your taxable income and in some cases can be partially refunded to you, up to $1,400 per qualifying child.
Another change to the CTC is the requirement for qualifying children to have a Social Security Number (SSN). In the past tax payers were able to use an ITIN (Individual Taxpayer Identification Number) or an ATIN (Adoption Tax Identification Number) in place of a SSN. This is no longer the case as tax payers will not be eligible for the CTC without a qualifying child with a SSN.
The new earned income threshold to qualify for the CTC is $2,500. If you do not make at least $2,500 in earned income for the 2018 tax year you will not qualify for the credit.
The new income phaseout begins at $200,000 for Head of Household and Married Filing Separate returns or $400,000 for Married Filing Joint and Qualifying Widow(er) returns.
The TCJA also includes a new $500 credit for qualifying dependents, including those who are ineligible for the CTC. There is no age limit or SSN requirement for this credit.
To qualify for this credit you must meet the following qualifications:
- Qualifying dependent must live with you for more than half the year
- The tax payer must provide more than half the support for the year to the qualifying dependent
- Qualifying dependent must not have any gross income
- Qualifying dependent must be a U.S. Citizen, U.S. National, or U.S. Resident
For more information on how Tax Reform has affected the Child Tax Credit click here.