Before the passage of the act, the credit was $1,000 per qualifying child, but it was reduced for married couples filing jointly by $50 for every $1,000 by which their Adjusted Gross Income (AGI) exceeded $110,000. (The threshold was $55,000 for married couples filing separately and $75,000 for unmarried taxpayers.)
Beginning this year, the Child Tax Credit has doubled to $2,000 per qualifying child under 17. ***It also allows for a new $500 credit (per dependent) for any of your dependents who are not qualifying children, under the age of 17. There is no age limit for the $500 credit, but there are tests for dependency that must be met.
The phase-out threshold amount for the tax credit has also significantly increased. Starting this year, the total credit amount allowed to a married couple filing jointing is reduced by $50 for every $1,000 by which their AGI exceeds $400,000 (up from the previously mentioned $110,000.) The threshold has changed to $200,000 for all other taxpayers.
To claim the $2,000 credit for a qualifying child, you must include the child’s Social Security Number (SSN) on your tax return. If the child does not have a SSN, you will NOT be able to claim the $2,000 credit. But, you can claim the $500 credit for that child, as well as non-qualifying child dependents, by providing an Individual Taxpayer Identification Number (ITIN) or Adoption Taxpayer Identification Number (ATIN).
Bottom line, if you were previously prohibited from taking the credit because your AGI was too high, take another look! Our tax advisors can answer any questions you have about the Child Tax Credit…Let’s Talk.