The child tax credit changes are HUGE for my clients with children. Many have historically been phased of out being able to claim the credit. However, this year most will be able to take advantage. I give you a brief summary of the changes and highlight those in the video below.
The enhanced child tax credit has been highlighted as one of the provisions of the Tax Cuts and Jobs Act designed to lower overall tax liability for middle-class families. The child tax credit is temporarily increased from $1,000 to $2,000 per qualifying child for tax years 2018 through 2025. As much as $1,400 of that amount is refundable. The child tax credit is also expanded to provide for a new $500 nonrefundable credit for qualifying dependents other than qualifying children. In addition, more families will be able to take advantage of the credit due to an increase in the adjusted gross income phaseout thresholds.
The $2,000 child tax credit per qualifying child phases out once the taxpayer’s modified adjusted gross income (MAGI) exceeds $400,000 if married filing jointly, or $200,000 for all others. The new phaseout threshold is more than double the old phaseout threshold and will allow more taxpayers to benefit from the child tax credit. The previous thresholds were $75,000 and $110,000.
Let me know if you have any questions – I’m here to help! I can be reached at jcrutcher@nashtax.com