For a large percentage of our clients, a big change this year is in the earned income and child tax credits. These credits have increased, some slightly, some a lot.
The earned income credit has increased slightly, as it does every year. Qualification for this credit hasn’t changed, so if you have used that credit before, it shouldn’t be a problem this year.
Earned Income Tax Credit (EITC) for 2018, the maximum EITC amount available is $6,444 for taxpayers filing jointly who have 3 or more qualifying children. The IRS has a table providing maximum credit amounts for other categories, income thresholds, and phase-outs.
The child tax credit has increased significantly. It has also become more complicated. However, it will still be a major benefit for most of our clients with children.
The Child Tax Credit under 2018 tax reform is worth up to $2,000 per qualifying child. The age cut-off remains at 17 and the child must be under 17 at the end of the year for taxpayers to claim the credit. The refundable portion of the credit is limited to $1,400.
This amount will be adjusted for inflation after 2018.