As tax credits reduce the tax bill in the most efficient way, many may wonder how to earn them. Among various types of tax credits, child tax credit is always on the list of the most popular ones. This article intends to introduce the basics of child tax credit.
Child tax credit is designed to help reduce childcare expenses. To earn child tax credits, you need to claim the child element towards childcare costs for a child whom you have main responsibility for.
In United States, child tax credit offers a credit of up to $2,000 per child under age 17 who is a US citizen. This credit is refundable, which means if the credit amount exceeds taxes owed, you may receive a refund worth up to $1,400 per child. With other dependents you could also claim the child tax credit, but the credit is nonrefundable. Specifically, children aged 17-18 and full-time college students aged 19-24 could get a nonrefundable credit worth up to $500 each. Simply put, if you have young children who are still attending high school or below, you could earn refundable credits, while if your children are between 17-18 or 19-24 in school full time, you could receive nonrefundable credits.
Good news about child tax credit in United States is that in 2018, the child tax credit was doubled for qualified children under 17. If you have a child who is under 17 at the end of the year, you can claim larger credit amount than before. The GOP’s tax overhaul bill doubles the amount of credits from $1,000 to $2,000, and there is no upper limit for receiving these credits. In other words, if you have one child, you will be able to claim a $2,000 credit; if you have two, you earn $4,000 credits, and so on.