For families, claim Child tax credit is a powerful way Reduce their tax bill. Provides eligible taxpayers with a reduction in eligible child tax liability of up to $ 2,000.
Sounds very valuable, doesn’t it? this is. So if you doubt that you are eligible, it is worth finding out what the child tax credit is and how to claim it.
“Everyone who is eligible should consider and take a child tax credit,” Philes Joe Kube, a nominated agent and certified financial planner in New York City, wrote in an email. “Generally, if you have an eligible child who was under 17, who has a social security number, you are eligible.”
Learn about claiming child tax credit here.
What is a Child Tax Credit?
The Child Tax Credit, or CTC, is a federal tax credit available to eligible families who have one or more eligible children.
How much is child tax credit?
For 2020 income, it reduces the tax liability of eligible taxpayers to $ 2,000 per child. So an eligible family with two eligible children can deduct up to $ 4,000.
To understand the true value of child tax credits, it is important to understand what the credit is, Kube says. Unlike a tax deduction, which reduces your taxable income, a credit creates a dollar-to-dollar reduction of your tax bill. What’s more, it’s a Refundable credit. This means that it can actually slab you more than your bill, up to $ 1,400 per child. This refundable portion is called the Additional Child Tax Credit or ACTC.
There is also a related $ 500 Irrevocable Loan for those who do not qualify for the Child Tax Credit. It may be available to taxpayers, for example, if they have dependents over the age of 17 College students.
Changes in Child Tax Credit
tax reform The maximum amount doubled is from $ 1,000 per child. Those with higher incomes are also eligible to claim this credit after tax reform.
Who is eligible to claim child tax credit?
Taxpayers must have eligible children and must earn below a certain income threshold to qualify for a $ 2,000 loan. Above those thresholds, which are $ 200,000 for single fillers and $ 400,000 for weddings and filings for those who are no longer available, the amount is phased out or reduced until then. These income cuts were augmented with tax reform, Kube says.
Keep in mind that you must have a qualified child to claim credit. The child must have a son, daughter, step-child, adopted child or foster child or descendant of one, such as a grandson. They can also be siblings or stepbrothers, siblings or nieces or nephews. The child must have a social security number and must be under 17 at the end of the tax year. They should stay with you for at least half a year and not offer their support.
Charles Capitanakis wrote, “Davidoff Hutcher & Citron, Certified Public Accountant and Partner in New York”, wrote, “It’s very difficult because most of us think at the age of 18 that people are children, but the cutoff in child tax credits As 17 is used. ” an email. “The key to remember is this: every dependent child under the age of 17 who is a US citizen at the end of the tax year.”
How can I claim child tax credit?
You must file a federal tax return to claim the child tax credit. Because this credit is luring fraudsters, you may have to verify that you are claiming it legitimately. Kube noted that tax preparers have additional due diligence requirements when working with customers who claim this credit. If you are claiming on ACTC, you can also know that your refund is delayed, just like when you claim Income tax credit earned.
Keep in mind that you will need to collect the social security number of your dependents and you cannot claim a child that has already been claimed by someone else. If you are co-parenting with an ex-husband or any other partner, you must coordinate with that person.
a Tax software The program should be able to walk you through the qualifications and tell you if you are eligible to claim the child tax credit. “If you use commercial tax software and have entered your children’s information correctly, the software should automatically calculate the credit,” Kube says.
What if I forgot to take the child tax credit last year?
If you think you are eligible – and your children are eligible – to take credit last year, but you forgot to claim it, go back and Amend your original tax return For the last three years. Keep in mind that your eligible children must have Social Security numbers during those years, and you must use the relevant tax laws for the year in which you are filing, not the current tax year.
If you are eligible, you are eligible to take this credit. After all, children are expensive. Child tax credit provides little relief.