Under the new Tax Cuts and Jobs Act (TCJA) the following child tax credit changes will take place in 2018:
- The Child Tax Credit under 2018 tax reform is worth up to $2,000 per qualifying child. The age cut-off remains at 17 (the child must be under 17 at the end of the year for taxpayers to claim the credit).
- The refundable portion of the credit is limited to $1,400. This amount will be adjusted for inflation after 2018.
- The earned income threshold for the refundable credit is lowered to $2,500.
- The beginning credit phaseout for the CTC increases to $200,000 ($400,000 for joint filers). The phaseout also applies to the new family tax credit.
- The child must have a valid SSN to claim the nonrefundable and refundable credit.
Child Tax Credit Eligibility
The child you claim as your dependent has to meet six IRS tests:
- Age Test: The child you claim as your dependent must have been under age 17 (so, 16 or younger) at the end of the tax year.
- Relationship Test: The child must be your daughter, son, foster child or adopted child. The child can also be a grandchild or a descendant of one of your siblings.
- Support Test: The child must not have provided more than half of their own “support,” meaning the money they use for living expenses.
- Dependent Test: The child must be claimed as your dependent on your federal income tax return.
- Citizenship Test: The child must be a U.S. citizen, a U.S. national or a U.S. resident alien.
- Resident Test: The child must have lived with you for more than half of the tax year (with a few exceptions detailed on the Child Tax Credit worksheet).
In addition to these six tests, income is also an eligibility factor. As your modified adjusted gross income (MAGI) increases, the child tax credit begins to phase out. You’ll get $50 less in child tax credits for every $1,000 – or portion of $1,000 – that your modified AGI exceeds:
- $75,000 if you’re filing as the head of your household, single or as a qualifying widow(er)
- $110,000 if your filing status is married filing jointly
- $55,000 if your filing status is married filing separately