What is the Child Tax Credit?
The child tax credit is provided to the Americans for each child who is under 17 years at the end of the tax year. They can enjoy a leave of $1,000 in their income tax. In December 2017, the credit got doubled to $2,000 per child, and more of it became refundable.
How Does the Child Tax Credit Work?
After December 2017, the Child Tax Credit was doubled to $2,000 each child, which makes $1,400 of it refundable. If the parent owes no tax or less than the refundable amount, up to that amount can be received as a tax. But the parent and child must fulfill their eligibility.
A single taxpayer can claim this tax credit even if they stay with both the parents during the tax year. The parent who has the primary custody of the child receives the tax credits. In case of joint custody, the parents have to agree about when each will claim the credit account to some formula.
The eligible children must be 17 years or younger and should be a US citizen. This is for high-income families that will ultimately help the lower or middle-class families.
The Internal Revenue Service or IRS has laid down several factors that determine the eligibility of both parents and children for the child tax credit. For the children, the child must be a US citizen, US national, or US resident alien. The child must have lived with the filer for more than 6 months of the tax year and be claimed as a dependent taxpayers’ return.
Also, the taxpayers can qualify for the Child Tax Credit by claiming their children, or other family members under 17 years of age. Siblings, grandchildren, nieces, and nephews are also eligible for the child tax credits if they meet aforesaid rules. Adopted and foster children have the benefit to claim the tax.
Since it is designed to help lower and middle-class families, in 2017, married couples can file a joint return that was phased out with a gross income of $110,000. For single, head of household, and widow the income was $75,000. The new tax law hiked these incomes to $400,000 for married couples and $200,000 for the others. This higher level will have a drop in the year 2025.
The Child Tax Credit can give you additional benefits that you can enjoy being a parent. It is beneficial for single parents or heads of the household filer since it can leave you with your income tax. The extra earnings can be saved for you and your child’s future investments. However, the benefits come with some exceptions. Therefore, you must fulfill certain criteria for the eligibility of the Child Tax Credit. Not only for children but nephews, nieces, and grandchildren can also claim this offer, if they are US citizens and younger than 17 years of age.