By Alexander T. Lewis of Duff & Kronfeld, P.C. posted in About the Law on Friday, March 15, 2019.
We are all aware of the significant changes to the federal tax code under the Tax Cuts and Jobs Act, but how does the new tax law effect family tax credits?
First, it is important to understand that the new tax law eliminates personal and dependent exemption deductions. This means that you can longer claim these deductions for purposes of reducing your taxable income.
It’s not all bad news though as the new tax law includes more generous child tax credit rules.
The new law increases the maximum child credit to $2,000 per “under-age-17 qualifying child.” This is increased from $1,000 per qualifying child in 2017. Further, the income limits for being able to claim this tax credit increased under the new law. Significantly, up to $1,400 of the tax credit may be refundable for each qualifying child, even if you do not owe any taxes!
Lastly, there is a new tax credit available for “other dependents” for dependents that an individual cannot claim the child tax credit. These “other dependents” may include dependent children who are age 17 or older at the end of 2018 or parents of other qualifying relatives supported by the taxpayer.
For additional information as to these tax credits, please visit https://www.irs.gov/newsroom/get-ready-for-taxes-heres-how-the-new-tax-law-revised-family-tax-credits.
The determination as to which party is able to claim these child tax credits is an often disputed issue in a divorce or custody case and you should work with your attorney and a CPA to determine the best approach for your case.
If you have any questions or would like to discuss your legal matter with an attorney, please contact Duff & Kronfeld, P.C. at (703) 591-7475 for a complementary, 30-minute consultation.