Big changes from the Tax Cuts & Jobs Act of 2017 (TCJA) continue to impact American families—especially divorced, separated, and unmarried parents. One of the biggest shifts? The dependency exemption for children, a longtime point of tension during tax season, was wiped out starting with 2018 tax returns. (Good news: your 2017 filing wasn’t affected.)
Instead of the old exemption, the IRS now offers a much larger standard deduction: $12,000 for singles or separate filers, $18,000 for heads of household, and $24,000 for married couples filing jointly. The number of kids you have doesn’t impact this deduction—but it does mean you must choose between standard or itemized deductions carefully. At the same time, the child tax credit has been sweetened for those who qualify.
Here’s What Changed with the Child Tax Credit:
- It’s now worth up to $2,000 per qualifying child (under age 17).
- Up to $1,400 of that can be refunded to you—starting to adjust for inflation after 2018.
- You only need $2,500 in earned income to claim the refundable portion.
Higher income earners take note: the phaseout now begins at $200,000 for single parents, and $400,000 for joint filers.
One key detail: your child must have a valid Social Security number to qualify. Also, even though the dependency exemption is gone, you still must meet certain IRS tests—relationship, support, dependency, citizenship, and residency—to claim the credit.
Quick IRS Checklist:
- Under 17 by year-end.
- Didn’t provide more than half their own support.
- Listed as a dependent on your return.
- Is a U.S. citizen, national, or resident alien.
- Lived with you more than half the year (with some exceptions).
Keep in mind: unless Congress extends it, all these expanded child tax credit benefits expire after 2025.
Tax filing is trickier now than it used to be. Start early, get organized, and lean on the experts at TYSLLP.com if you need help. Call us at 925-498-6200—we’re here to make it simpler and smoother for you.
If you are not sure where you land on this or any other tax question, contact us at https://tysllp.com/contact-us/
Sources:
Pittsburgh Magazine
http://www.pittsburghmagazine.com/Pittsburgh-Magazine/March-2018/New-Tax-Law-Eliminates-Child-Tax-Exemption-for-Parents/
The Internal Revenue Service online
www.IRS.gov
Smart Asset
https://smartasset.com/taxes/all-about-child-tax-credits
The Internal Revenue Service online
www.IRS.gov
Smart Asset
https://smartasset.com/taxes/all-about-child-tax-credits