Happy New Year, family, friends, and clients!
My first blog post of 2018 is on the new child tax credit. The Child Tax Credit is one of the most discussed portions of the Tax Cuts and Jobs Act recently signed into law by your boy, Donald J. Trump, and Republicans. Let’s jump right into how TCJA affects the CTC.
What you need to know:
- The changes to the Child Tax Credit won’t take effect until next tax season when you will be filing your 2018 return. Don’t expect a bigger refund this year.
- In previous years, there was a Child Tax Credit worth $1,000 per child which was nonrefundable but could be applied to your tax liability.
- Also in previous years, there was a refundable Additional Tax Credit which will be eliminated (or combined with the New CTC depending how you choose to look at it).
- Under tax reform, the CTC will be increased to $2,000 per child with the refundable portion being $1,400.
- The CTC has been expanded to include a $500 nonrefundable credit for qualifying dependents other than children. This makes up for the elimination of exemptions for dependents like your parents.
That’s a quick and easy rundown of the Child Tax Credit after the reform. Feel free to leave a comment below. I hope to post some more Reform related topics soon.