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Claiming Kids On Taxes: 10 Of Your Most Pressing Questions Answered About The Child Tax Credit

December 5, 2018

It’s almost tax time! Will you have all your documents in order when the IRS begins accepting returns in late January? If you are a parent claiming a child on your taxes or a caregiver, you could be eligible for a child tax credit.

Filing taxes can be painstaking. The stress of wondering if you’ll owe Uncle Sam begins to creep up on you as tax time approaches. Being able to claim certain deductions reduces some of the worries.

The IRS has specific rules about write-offs and deductions. Regardless of your filing status, we have you covered when it comes to the child tax credit.

Continue reading for the answers to 10 of the most pressing questions about claiming kids on taxes.

1. Who is Eligible for the Child Tax Credit?

To determine eligibility for the Child Tax Credit you will need to pass the IRS relationship test. The credit is for your biological, adopted, stepchild or children placed in your care by the state foster care system.

The child can also be a niece, nephew or grandchild in your care.

Other requirements mandate that the child be a US citizen, national, or resident alien. You will need to enter a valid social security number for each child you claim.

2. Is There an Age Limit for Claiming Kids on Taxes?

The age limit to qualify for the tax credit is confusing to some. The rules state that a child must be under the age of 17 at the end of the tax year. This basically means the credit is for children 16 and under.

Sometimes people see 17 and think their child qualifies if they turn 17 during the year. This is not the case.

3. What Amount is the Tax Credit?

There is good news for parents. Child tax credit 2018 has doubled from 2017. The credit is now $2,000 for each qualifying child.

On the flipside, the new tax laws eliminate the personal exemption altogether but increase the standard deduction amounts for filers. You will need to know your filing status to determine what deduction bracket you fall into.

Even with the changes, some families will see little change in their refunds.

4. Is the Deduction Refundable?

In previous tax years, the Child Tax Credit was nonrefundable. The credit was just a means to lower your tax liability. If your tax liability was reduced to zero, you still did not receive a refund on the credit.

Another big change for the 2018 tax credit is that you may be eligible for a refund. It is a bit cumbersome to try and explain in this article. But it is something you should research when filing your taxes.

Evaluate your tax situation

By evaluating your tax situation, you can identify areas where you may be able to reduce your tax burden and make informed decisions about your financial future.


5. Can Both Parents Claim the Child Tax Credit?

With the exception of married couples filing a joint return, only one parent can claim the Child Tax Credit. In cases where parents do not live together, it is typically the custodial parent that can claim all benefits relating to the child.

If the custodial parent is okay with the non-custodial claiming the child, he or she will need to sign Form 8332.

6. What if Another Person Claims the Credit?

Only one taxpayer can claim a child. Your tax return will be rejected if you file electronically using an SSN that has been previously filed.

If this happened to you, print out your return and send it in by mail. Notify the IRS of the issue and they will review both returns to determine who has the legal authority to claim the child.

You will receive your refund if the test proves you are the custodial parent and have not granted permission to the other party. There are penalties for dependent fraud and it will need to be decided if the act was intentional or a mistake.

7. Does the Child Have to Live with Me?

As mentioned above, the Child Tax Credit, as well as other dependent exemptions and credits are meant to be used by the custodial parent. There are circumstances that will allow a noncustodial parent to claim the child.

It is important that all involved parties have a discussion and come to an agreement as to who will claim the child. Document the agreement and have the custodial parent sign Form 8332.

The form is then submitted with the tax return of the person claiming the child on their taxes.

8. Can the Dependent Have Income?

You are allowed to claim the Child Tax Credit for your dependents under the age of 17 even if they are employed or have unearned income.

It is worth noting that a child with earned income of $12,000, and unearned income of $1,050, is required to file their own tax return.

9. Is there an Income Cap on the Credit?

Yes, there are income caps for the Child Tax Credit. A married couple filing jointly cannot earn more than $400,000 a year. The maximum for other filing statuses is $200,000. These numbers are for the upcoming tax year.

Aside from the eligibility requirements, we have already mentioned, there are rules. The child you are claiming cannot file a tax return for the sole purpose of receiving a refund.  Nor can they file a joint return with someone else.

10. Are Disabled Dependents Eligible?

Disabled dependents are eligible for Child Tax Credit as long as they are under the age of 17. If you have adult dependents with disabilities you can still claim them on your taxes.

If you are eligible for the Earned Income Tax Credit that will factor into how much you can receive in a refund. You can also claim the Child and Dependent Care tax credit for adult dependents.

Let’s Wrap Things Up

As long as you and your dependent can pass the age, relationship, support, dependent status, citizenship, length of residency and family income tests, you should have no problem claiming the Child Tax Credit. Once you have a better understanding, claiming kids on taxes gets easier.

There is a new tax bill and many people are confused as to what it will mean for them. Click here to see if you should consult with a tax accountant to understand the changes.

Clinton F Wassor

Clinton F. Wasser, holding a Master of Science in Legal Studies of Taxation, brings a wealth of expertise in tax planning and compliance to his writing. With a career rooted in the workings of the tax landscape, Clinton navigates difficulties with finesse. Beyond his professional accomplishments, he generously volunteers his time to educate high school students about the nuances of taxes. As an author, Clinton marries his real-world experience with a passion for simplifying tax concepts. He has found that his technique empowers readers to better understand the world of taxation.
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