Recent Changes to the Child Tax Credit. The Tax Cuts and Jobs Act of 2017 brought some big changes to the U.S. tax code. These changes went into effect for the 2018 tax year and apply to 2020 taxes. This new tax plan included the following changes to the CTC:
1) The credit amount (per child) increased from $1,000 to $2,000.
2) The CTC is refundable up to $1,400. It previously was not refundable.
3) Children must have a Social Security number to qualify.
4) The earned income threshold to qualify for the CTC is $2,500.
5) The CTC phases out at an income level of $200,000 for single filers and $400,000 for joint filers.
In 2017 the phase-out level was $75,000 for single filers and $110,000 for joint filers.
6) There is now a $500 (non-refundable) credit available for each dependent older than 17.
Another big change was that the new tax plan largely combined the Additional Child Care Tax Credit (ACTC) with the CTC. This is part of the reason the CTC became refundable and its limits increased.
THE CHILD TAX CREDIT WORK UNDER CURRENT LAW
(1) Eligible families can claim a tax credit – which reduces income taxes they owe dollar-for-dollar – of up to $2,000 per child under age 17 who is a citizen of the U.S. The size of the credit is reduced by $50 for every $1,000 of adjusted gross income above $200,000 for single parents and $400,000 for married couples.
(2) Families who owe little or no income tax can get cash of up to $1,400 per child, a feature which makes the tax credit partially “refundable,” in the jargon of Washington.
(3) Other dependents – including children ages 17 and 18 and full-time college students ages 19 to 24 – are eligible for a non-refundable credit of up to $500.
I hope this clears your doubts
