The Tax Cuts and Jobs Act that passed in December 2017 cut dependency exemptions and enhanced child tax credits beginning in 2018.
The enhancements start with a broadened pool of eligible taxpayers. In prior years, a taxpayer’s credit amount began to phase out at $110,000 Beginning January 1, 2018, the credit begins to phase out at $400,000 for married filing jointly and $200,000 for married filing separately which significantly increases the amount of eligible taxpayers.
Another change is to the actual credit amount. The amount has been doubled from $1,000 to $2,000 per qualifying child and is not adjusted for inflation.
The refundable portion of the credit is $1400 per qualifying child. A qualifying child is a child who is under the age of 18 at year-end.
The changes go in-depth as to what qualifies a child for the credit amount, as well as how other dependents are covered.
To learn more about the changes and how they might affect you, please give us a call at (859) 331-1717.