Yo, what's up guys! It's Eli here from Build Your Tomorrow, a channel all about personal finance. Today, we have some exciting news to share about the child tax credit under the new tax reform law. Let's dive right in! - The big news is that the child tax credit has increased to $2,000 per qualifying child, up from $1,000 in 2017. This means that you could potentially receive up to $2,000 for each of your eligible children. - To qualify for the credit, your child must meet certain criteria. They need to be under the age of 17 and can be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, grandchild, niece, nephew, or an adopted child. Additionally, the child must not provide more than half of their own financial support. - In order to claim the child tax credit, you must include the child on your federal tax return, and they must have a valid social security number. The child also needs to be a US citizen, US national, or a US resident alien. Lastly, they must have lived with you for more than half of the tax year, with some exceptions such as if they were away at school. - One great thing about this credit is that it is refundable. This means that even if you don't owe any federal taxes, you can still receive money back from the government. - Let's look at a couple of examples to better understand how this credit works. In the first example, imagine you're a parent of three qualifying children, earning around $35,000 and your tax bracket is 25%. Your tax liability would be $8,750, but with the child tax credit of $6,000 ($2,000 per child), your total taxes owed would be reduced to $2,750, resulting in an effective tax rate of about...
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Schedule 8812 calculator Form: What You Should Know
The total child tax credit amount that could be claimed would be reduced by the child tax credit percentage from the previous year. You can claim any amount of this adjusted-gross income that is equal or below 100% of the federal poverty level. The additional child tax credit is used to offset the amount of a tax liability as well as for tax payment purposes. There are 2 phases to the child tax credit. Phase 1 : The first phase of the child tax credit is the standard deduction, if you itemize. The amount of the tax credit you get is the amount by which: (a) The percentage of your modified adjusted gross income exceeds 100% of the federal poverty level for the year, or (b) Your eligible child has earned income for the year. Phase 2 : For the second phase of the child tax credit, the amount is as follows: Tax Credit Amount First 20% Additional Child Tax Credit (ACT) 0.00 If either phase 1 or phase 2 fails to apply to you or if you make a qualifying child for the first time during the tax year, you can use Schedule SSA-E, to claim your credit. Form 8812 is only for tax filing and not for claiming the credit. You do not need to attach Schedule 8812 to your tax return. If you made a qualifying child for the first time, you are also allowed to add Form 8812 to your income and claim the credit for the subsequent year. If you had earned taxable income from qualifying child during the year, your tax liability or the federal tax credit for the year is reduced by the amount of credit you actually claim. If you have a tax liability of 2,000 or less, claim the standard deduction in step 1. If you have other eligible children that you can't claim for a total of 12,000, claim the Additional Child Tax Credit in step 1 before claiming the standard deduction. This is because, in step 1, you are required to figure the standard deduction in an after-tax amount. If you do not claim Form 8812 by the due date, the IRS will determine your actual tax liability. You can get a copy of Form 8812 from the IRS, by clicking here. If you don't have any income, but you had other taxable income, report the income in 2024 to avoid getting a penalty.
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