Children are a precious gift and a blessing. They can also benefit you come tax time. Thanks to the Tax Cuts and Jobs Act (TCJA) you can no longer take an exemption for dependents.
However, not all has been lost. Prior to the TCJA you would have received a $1,000 credit for each of your dependent children. This child tax credit has now been increased to $2,000 per child. In addition to your biological child your stepchild, foster child, niece, nephew, sibling and grandchild could also qualify as your child in 2020 provided that he or she:
- Lived with you for more than half of the year
- Is under the age of 17
- Did not provide more than half of his or her support
- Has a Social Security number
- Did not file a joint return unless it was only to claim a refund of taxes
The child tax credit is available to you provided that you, or your spouse (if filing jointly), cannot be claimed as a dependent and your income is within and under the following limits:
|FILING STATUS||INCOME LIMIT|
|Single, Married Filing Separately or Head of Household (with 1 child)||$200,000 – $240,000|
|Single, Married Filing Separately or Head of Household (with 2 children)||$200,000 – $280,000|
|Married Filing Jointly (with 1 child)||$400,000 – $440,000|
|Married Filing Jointly (with 2 children)||$400,000 – $480,000|
You may also be able to claim a relative who does not meet the tests of a qualifying child but that individual must be a U.S. citizen, U.S. national or a U.S. citizen and not make more than $4,300 in 2020.
The tax laws are always changing but knowing the rules will help you maximize your credits and your refund.