Who is Eligible for the Child Tax Credit?

Nashua Couple Inquires

The Child Tax Credit (CTC) is worth up to $2,000 per child or other dependent that is younger than seventeen years old.  To qualify, you must earn an annual income of at least $2,500.  For single filers, this credit begins to phase out at $200,000 annual revenue and $400,000 for couples filing jointly. 

With big changes implemented with the Child Tax Credit for the 2018 tax year, a Nashua, NH couple with three children were left wondering what these changes meant to them.

Which Dependents Qualify for the Child Tax Credit

To qualify for the child tax credit, dependents must meet six criteria set by the IRS.  The child must be under the age of seventeen at the end of the tax year.  The qualifying dependent must be a daughter, son, stepchild, foster child, adopted child, sibling or step-sibling.  To be a dependent child, they cannot have provided half of their own financial support and living expenses.  The child must be claimed on your federal tax return.  Finally, to be a dependent the child must be a US citizen and must have lived with you for more than half of the tax year.

When Child Tax Credit Exceeds Liability

For the 2018 tax year, $1,400 of this tax credit is refundable.  In previous years, the entire credit was not refundable.  This means that if your tax bill when you filed your 2018 taxes was zero, you may be able to get a $1,400 refund for each child when you file in 2019.  This refundable portion is capped at 15% of earned income that exceeds $2,500. 

The parents in Nashua now have a better understanding of what to expect from the child tax credit, and how this will affect their taxes going forward.