Child Tax Credit

Do I Qualify?

You might have noticed on your 2018 tax return that you no longer received a deduction on your federal tax return for your dependents. Effective for the 2018 tax year, the IRS removed the personal and dependency exemptions, which were $4,050 per person.

You might have also noticed you received a new tax credit called the Child Tax Credit. For 2018, the maximum credit increased to $2,000 per qualifying child. The income threshold at which the child tax credit begins to phase out is increased to $200,000, or $400,000 if married filing jointly.

“Happy” or “Sad” 17th Birthday….

Does your dependent child turn 17 in 2019?

If this is the case and you received a $2,000 child tax credit in 2018, the credit will be reduced to $500 in 2019. Children 17 and over only qualify for up to a $500 tax credit instead of $2,000.

Uncle Sam might be celebrating your son or daughter’s 17th birthday more than you. In general, the above age limitation will lead to a $1,500 tax increase when you file next year.

Is My Adult Child Still a Dependent?

The four tests below must be passed in order to qualify:

Relationship- The child must be the taxpayer’s child or stepchild (whether by blood or adoption), foster child, sibling or step-sibling, or a descendant of any of them.

Age- The child must be under age 19 or a full-time student under age 24 at the end of the year. To be considered a full-time student, the child must be enrolled for the number of hours or courses the school considers to be full time and must be a student for at least five months during the year.

Residency- The child must live with the taxpayer for more than one-half of the year. If the child is temporarily away from home due to education, illness, business, vacation or military service, they receive an exemption from the residency test.

Support- The student cannot have provided more than one half of his or her own support.