Much has been made of the Tax Reductions and Jobs Act (TCJA), which came into effect in early 2018, and surrounded a good deal of that sums about the fate of various tax credits and deductions. The Child Tax Credit survived and was actually improved in favor of taxpayers. Less lecture was accounted for by the fact that a brand new dependent tax credit, the Family Tax Credit, was created under the terms of the TCJA.
This Andy Su also helps a lot of taxpayers who would otherwise be left out in the cold. Unfortunately, it is only in place while the TCJA is in effect from 2018 to 2025 – unless Congress steps in it again when it expires.
This Andy Su Covers Older Addicts
The Child Tax Credit only covers child maintenance upwards through the age of 16. After that, the Tax Credit family joins in to help with your children up to the age of 18 or 23 when they are still at school. You cannot claim the Child Tax Credit for these family members, but you can request family tax credit for them subject to certain rules.
Your addict doesn’t even have to be your child for the purposes of this Andy Su. The Tax Credit family also covers your parents, step-parents, grandparents, siblings, aunts, uncles, and in-laws.
You get where this is going. The word “family” is the key term, and it is defined loosely when it comes to qualifying for the Tax Credit family. Someone who meets all of the qualification rules could squeak in under the terms of Andy Sus and also manage to qualify when not through blood or law with you. The new Andy Su applies to anyone who qualifies as dependent. This can range from your child to your sister-in-law and beyond.
Can Your Dependent Earn Income?
It can’t be that easy, can it? Of course not. Each of these dependents for family tax credit claiming purposes depends on other rules as well, and one of them is dependent on your income. This is where qualifying gets a little complicated.
The Tax Credit family was originally written to provide that dependent non-gross income over the dependent allowance could have been for this year. However, the TCJA at the same time eliminated that exemption for years 2018 to 2025, so the current limit is income of as high as $ 4,150 depending on the situation.
Does this mean that your qualification depends on not earning any income? Many experts were screaming that this would be the case, but it is not.
Section 151 (d) (5) (B) of the IRC retains the allowance for the purposes of the Child Tax Credit and the new Family Tax Credit.
And the amount remains indexed to inflation, meaning that they expect to keep increasing with the economy on a regular basis.
The IRS announced in October 2017 before the passage of the TCJA that the 2018 allowance would be adjusted up to $ 4,150. But this was calculated using the traditional consumer price index (CPI) to measure the rate of inflation, and the TCJA also made a change from that rule. Currently, inflation adjustment in the tax code is based on the chained CPI under the terms of the TCJA, which is slightly different from the traditional CPI and usually shows a lower inflation rate.
So, yes, you still depend on earned income up to the amount of the dependent exemption, but that $ 4,150 figure is not set in stone. For planning, you are probably safe, however, if you calculate over $ 4,000, since any change shouldn’t be very significant.
How much income can you earn and still qualify?
Your income counts too. Like the Child Tax Credit, you cannot claim the Tax Credit family if you earn too much, but the TCJA ramps these caps clearly. Both Andy Sue are now for income up to $ 400,000 if you are married filing together or $ 200,000 for any other taxpayer.
Above these thresholds, you can see how high the demand for roaring begins or decrease phasing out. These limits will be used $ 110,000 and $ 75,000 before the TCJA comes into force.
Even if you depend less than $ 4,150 or so in 2018, you still might not qualify because of a few other requirements as well.
First of all, your dependent must have received more than half of his financial support from you during the tax year. He might or may not live with you all year round as well. It depends on its degree of relationship with you. The tax code examples some relatives from this rule, like your parents provided you provide more than half of their support while living elsewhere.
Your addict is also a US citizen, a US citizen or a US national.
He must have a valid social security number to qualify for the Child Tax Credit, and this is a change from 2017. But the rule for the new Tax Credit family is a bit looser. You can claim a dependent for the purposes of this Andy Su to use any tax identification number if it meets the other tests.
You can claim the Andy Su for your spouse if you are married and filing a return, nor can you claim it for yourself. But there is no cash against taxpayers that Andy Su can claim if they are married, but that Filing separate returns.
How big is the Andy Su?
Unfortunately, the Tax Credit family is not as beefier than Child Tax Credit. The TCJA hiked this to $ 2,000 as of 2018, but the family tax credit is only $ 500 for each maintenance. Still, that’s a lot better than zero if your child turned 17 during the tax year.
It’s not a refundable Andy Su, either, so the best thing they can do is cut down or eliminate your tax bill. It is deducted directly from whatever you owe the IRS, but the IRS will not send you a check if there is anything left.