Child Tax Credit in Detail

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Discussion
To claim the child tax credit, a taxpayer must determine if their child is eligible, have earned income above a certain level, and have adjusted gross income below a certain level. The amount of potential tax credit is $1,000 (refundable) for 2017 and $2,000 ($1,400 refundable) for 2018.

Child Eligibility

1. Age Test - The dependent must be under the age of 17.

2. Relationship Test - The dependent must be a child (natural or adopted), stepchild, or foster child of the taxpayer.

3. Support Test - The dependent may not provide more than half of their own financial support.

4. Dependent Test - The child must be claimed as a dependent on the taxpayer's tax return.

5. Citizenship Test - The dependent must be a U.S. citizen, a U.S. national or a U.S. resident alien.

6. Residence Test - The dependent must have lived with the taxpayer for more than half of the tax year. Exceptions exist for a child who was born or died during the tax year.

7. Family Income Test - To claim the refundable portion of the child tax credit, a taxpayer must make over $3,000 for 2017 ($2,500 for 2018). If a single taxpayer had an adjusted gross income (AGI) in 2017 over $75,000 ($110,000 married), the credit begins to phase out. If a single taxpayer had an adjusted gross income (AGI) in 2018 over $200,000 ($400,000 married), the credit begins to phase out.

References
https://www.irs.gov/pub/irs-pdf/f1040s8.pdf
https://www.irs.gov/pub/irs-pdf/p972.pdf

Disclosure
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.