Raising kids is expensive, but if you qualify for the Child Tax Credit, your kids could actually save you money!
Children can be worth up to $2,000 each—in taxes, that is. If you have kids and earn less than $400,000 as a married couple or $200,000 as an individual, the Child Tax Credit will save you money on taxes this year.
Yes, you read that correctly—your kids might mean you pay less in taxes!
The Child Tax Credit is a tool that helps reduce the amount you pay in taxes. Whatever amount of the tax credit you receive is subtracted from the total of your tax bill, which could significantly cut the amount you pay.
Parents or guardians with qualifying incomes can claim the full child tax credit amount for each of their dependent children. Preparing your taxes can be confusing and complicated, but qualifying working families and individuals in Southern Pennsylvania and Southern New Jersey can get free, professional help.
Exactly how much can you claim?
The child tax credit amounts to $2,000 per child in 2019.
Married couples filing jointly who make under $400,000 per year and single individuals, head of household, or married couples filing separately who earn less than $200,000 per year, will be able to take $2,000 per child as their Child Tax Credit.
For example, if you’re a single parent who makes $28,000 a year and you have three kids you can deduct $6,000 for a Child Tax Credit.
Are there income limits for the child tax credit?
For 2019, it’s $200,000 for the modified adjusted gross income. Taxpayers who are married filing jointly with an adjusted gross income of $400,000 or less can receive the full credit.
Beyond the basic income limits, there are a few more stipulations to qualifying for the child tax credit. In addition to knowing your income, you should double check the requirements dictated by the IRS, listed below in order to be certain you qualify for all or some of the Child Tax Credit.
Qualifying children must be citizens or residents of the United States who can be claimed as dependents by the taxpayer.
Children must not have reached the age of 17 by the end of the tax year.
Children may be your blood children, grandchildren, stepchildren, and/or adopted children. Foster children also fall under this category as long as they have lived in your home for the entire year in question.
You must claim the child as a dependent. You need to claim the child as a dependent on your federal taxes in order to be eligible for the credit.
The child must live with you. In fact, the child must have resided in your home for at least half of the tax year, although some exceptions apply.
We may argue and disagree about things like politics and religion, but pretty much every American is united in their desire for a lower tax bill. Who wants to pay more taxes than necessary? No one, of course!
The Bottom Line
It bears repeating—if you have kids and earn less than $400,000 as a married couple or $200,000 as an individual, the Child Tax Credit will save you money on taxes in 2019.