01/13/2018
Recently the Tax Cuts and Jobs Act (TCJA) was signed into law by President Donald Trump. One of the new tax reform changes was the Child Tax Credit or CTC.
The CTC was introduced into legislation in 1998. When started it allotted families a nonrefundable $400 per qualifying child under the age of 17.
It has undergone many changes over the last twenty years.
Pre-TCJA the CTC was worth up to $1000 per child. It was refundable for taxpayers who earned incomes of at least 3 grand. For taxpayers with Adjusted Gross Income (AGI) above $75000 ($110,000 for joint filers) it was phased out.
Under the new Tax Cuts and Jobs Act (TCJA)...
- The CTC is worth up to $2,000 per qualifying child (the child must be under 17 at the end of the year for taxpayers to claim the credit).
- The refundable portion of the credit is limited to $1,400. This amount will be adjusted for inflation after 2018.
- The earned income threshold for the refundable credit is lowered to $2,500.
- The beginning credit phaseout for the CTC increases to $200,000 ($400,000 for joint filers). The phaseout also applies to the new family tax credit.
- The child must have a valid SSN to claim the nonrefundable and refundable credit.
These are just a few of the changes that will effect your 2017 tax returns (filed in 2018).
For more information or for advice about claiming dependents, make an appointment with one of our tax professionals who can help you. www.theptsgroup.com
