Families have come accustomed to rely on different credits based on qualifying children to increase their annual tax refunds. The credits were created for that same reason, to help economically growing families. The good news first: the Child Tax Credit (CTC) doubled to $2,000. The refundable amount, also known as the Additional Child Tax Credit (ACTC), increased to $1,400. If a taxpayer does not have a tax liability before the credit, they will be refunded up to $1,400. The minimum income that needs to be earned to be eligible for the CTC has been lowered to $2,500 per family. The maximum income has been expanded to $200,000 for single filers or $400,000 for married couples filing jointly.

One more good news: dependents, that do not qualify because they are older than 17 at the end of December 31, 2018, may qualify for the new non-refundable credit of up to $500 per person.

The Earned Income Tax Credit (EITC) applies to taxpayers with low or moderate income and increases depending on how many child dependents you claim.  The maximum amounts of the credit for 2018 are:

One qualifying child…………………………….$3,461

Two qualifying children…………………..……$5,716

Three or more qualifying children………….$6.431

For the bad news:  to claim the child tax credit and the additional child tax, the dependent child must have a social security number valid for employment.  The social security card must specifically say “Valid for employment.” Before the tax reform, taxpayers were able to claim dependents with ITINs for the CTC or ACTC.  The new credit for other dependents can be claimed for dependents with ITINS though.

The second bad news is that the TCJA eliminated the child’s dependent exemption. For every child dependent, you were able to claim an exemption; not anymore.