As taxpayers plan their 2018 taxes, there is good news in the form of an enhanced child tax credit. The legislation known as the Tax Cuts and Jobs Act (i.e., Trump’s new tax law) doubled the credit amount, increased the refundable portion, and expanded its scope to include dependents other than qualified children. Additionally, the TCJA enlarged the pool of taxpayers eligible for the credit by increasing the adjusted-gross-income (AGI) ranges.
Under the TCJA, a taxpayer’s potential credit amount begins to phase out at $400,000 of modified AGI for joint filers and $200,000 for all others. Formerly, the credit began to phase out at $110,000 for joint filers, $55,000 for married filing separately, and $75,000 for all others. The new law doubles the credit from $1,000 to $2,000 per “qualifying child.” Also, the qualifying child must meet the relationship, abode, and support tests while also being under age 17.
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