The Tax Cuts and Jobs Act (TCJA) eliminates personal exemptions on your tax return, including dependency exemptions for children. But another TCJA provision may cushion the blow. The Child Tax Credit (CTC) for each qualified child under age 17 is doubled from $1,000 to $2,000. Of this amount, $1,400 is “refundable” (i.e., it is available even if you have no tax liability). Plus, the phase-out thresholds for the CTC are boosted to $200,000 of modified adjusted gross income (MAGI) for single filers and $400,000 of MAGI for joint filers.

Note: This will usually mean that the child must be related to the taxpayer (i.e. son, daughter, grandchild, etc.), must live in the taxpayer’s home more than half the year, and must not provide more than half of his or her own support. Special rules apply if the parents are divorced or legally separated, and those should be considered when completing a divorce settlement statement.

These changes under the TCJA are effective for tax years 2018 through 2025.  If you have any other questions about this valuable tax credit, please reach out to your JMF tax adviser.