The child tax credit is one of the most valuable tax credits for families with children under the age of 17. However, the rules are strict regarding whether you can claim the full child tax credit.
Our guide is going to introduce you to a child tax credit calculator you can rely on and show you exactly how this tax credit works.
What is the Child Tax Credit?
The child credit is a credit that can reduce your Federal tax bill by up to $2,000 for every qualifying child. The recent Tax Cuts and Jobs Act (TCJA) also dramatically increased the income limits, so now most families in America with qualifying children will have the chance to claim this credit.
The tax credit is not a deduction, so if you claim the full $2,000 and you owe $3,000 in Federal taxes, you’ll now only owe $1,000 to the Federal government.
Is this Tax Credit Refundable?
Before the overhaul of the tax haul in December 2017, the tax credit was non-refundable, meaning that if you don’t owe anything to the IRS you wouldn’t get to benefit from this credit.
However, the child tax credit is now refundable up to a maximum amount of $1,400. So, in theory you can get $1,400 back from the IRS.
Is Your Child Eligible for the Tax Credit?
There are six main tests that your child must pass in order to qualify for the tax credit. Here’s an overview:
- At the end of the tax year your child must be under the age of 17.
- The child must be a direct descendent of you, which goes all the way to grandchildren and adopted children.
- More than half of their financial support must come from you, the taxpayer.
- You must claim your child as a dependent. Each child can only be claimed as a dependent on a single tax return.
- The child must be a US citizen or a US resident alien.
- They must have lived with you for more than half the tax year.
It’s all quite simple, but if you’re divorced you may need to examine your affairs more closely and coordinate with the other parent as to who will claim the child as a dependent.
How Much Am I Eligible For?
The child tax credit calculator will show you exactly how much you can claim this year. It’s combined with a dependent’s calculator, so you can also add other dependents in your household.
How do you use it?
Just answer a few basic questions. Just like with the TurboTax online platform, you’ll be guided through the process step-by-step.
Follow the instructions and have some basic information about your personal and financial situation available and you’ll find out how much you can potentially claim in a matter of minutes.
Last Word – Find Out How Much You’re Owed Today
The child credit is one of the most valuable tax credits available to families. Use the child tax credit calculator to find out how much you could be owed today.
Have you tried the child credit calculator yet?