Child Tax Credit and Additional Child Tax Credit
The Child Tax Credit is an important tax credit for certain taxpayers (depending on income) with qualifying children under the age of 17.
The new tax law made generally favorable changes to the child tax credit and additional child tax credit. The child tax credit and additional child tax credit that may be worth as much as $2,000 per qualifying child, depending upon your income.
Child tax credit allowed you to reduce your federal income tax by up to $1,000 for each qualifying child under the age of 17.
A qualifying child for this credit is someone who meets the qualifying criteria of six tests: age, relationship, support, dependent, citizenship, and residence.
The credit is limited if your modified adjusted gross income (MAGI) is above a certain amount. The amount at which this phase-out begins varies depending on your filing status. In 2017, the phaseouts began if your MAGI was at the following levels:
- $110,000 for married taxpayers filing a joint tax return;
- $55,000 for married taxpayers filing a separate tax return;
- $75,000 for all other taxpayers.
In addition, the child tax credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.
You may be able to claim an additional child tax credit, if the amount of your child tax credit is greater than the amount of income tax you owe.
The new tax law made the following changes for tax years 2018 through 2025:
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Increases the child tax credit to $2,000 per qualifying child who hasn’t attained age 17 during the taxable year;
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Provides the maximum amount refundable (additional child tax credit) may not exceed $1,400 per qualifying child;
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Requires the inclusion of a social security number valid for employment for each qualifying child for whom the credit is claimed on the tax return;
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Modifies the child tax credit to provide for a $500 nonrefundable credit for qualifying dependents other than qualifying children and certain qualifying children without the required type of social security number; and
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Provides that the child tax credit begins to phase out for taxpayers at the following levels of MAGI.
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How will this affect me?
Joseph and Ann have three children, ages 12, 14, and 17, all of whom are claimed as dependents, have social security numbers valid for employment, and who lived with their parents all year. Joseph and Ann file a joint 2018 tax return and their MAGI is $44,000. They are eligible to take $4,000 of child tax credit. If this credit reduces their tax below zero, they can take up to $2,800 of refundable additional child tax credit.
The same as above, except their 2018 MAGI is above $400,000. The amount of child tax credit they may claim is subject to a phase out based on the Child Tax Credit Worksheet found in IRS Publication 972, Child Tax Credit.