In 2018, the credit was doubled to $2,000 per qualifying child. Also, beginning in 2018, the income levels at which the credit is phased out increased significantly for a Married Filing Jointly couple to $400,000 and $200,000 for all others. Phase-outs are not indexed for inflation. The credit is phased out by $50 for each $1,000 of adjusted gross income above the beginning phase-out amount. All qualifying children must have a Social Security number.
The child tax credit continues to maintain the same rules as pre-2018 tax law, including the definition of a dependent. The criteria for a qualifying child for purposes of the child tax credit is as follows:
The child was younger than age 17 at the end of the tax year and younger than the taxpayer and spouse, if applicable
The child did not provide more than half of his own support for the tax year
The child lived with the taxpayer for more than half of the tax year
The child is claimed as a dependent on the tax return
The child is a U.S. citizen, a U.S. national, or resident of the United States
Children who were born or died during the tax year are considered to have lived with the taxpayer the entire year if the taxpayer’s home was the child’s home during the time he was living. Temporary absences are deemed as time the child lived with the taxpayer.
The maximum Additional Child Tax Credit will be $1,400 in 2019, the same as in 2018.
For 2018-2025, the new tax law added a new non-child dependent credit (the “family credit”) for dependents other than qualifying children. The new $500 family credit is nonrefundable and applies to non-child dependents and child dependents even if they do not have a Social Security number (they will still need a taxpayer ID number). The table below summarizes these changes.
* There was no credit for non-child dependents, but a taxpayer was entitled to an exemption that was equivalent to a deduction of $4,050 in 2017.
The adjusted gross income phase-out threshold for the non-child dependent credit begins to phase-out with adjusted gross income in excess of $400,000 for Married Filing Jointly filers and $200,000 for all other taxpayers. Phase-out thresholds are not indexed for inflation.
The non-child dependent credit is effective for tax years beginning after December 31, 2017, and expires for tax years beginning after
Additional Child Tax Credit
The earned income threshold generally needed to qualify for the additional child tax credit was $3,000 for the tax year 2017 and was reduced to $2,500 for tax year 2018/2019. The refundable portion increased from $1,000 to $1,400 for 2018/2019.