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16433: 1040 - TCJA Changes to CTC, ACTC, ODC, and Exemptions


IRS Info/Alerts

How did the TCJA affect credits for children and dependents?

 

The following chart summarizes the changes implemented by the Tax Cuts and Jobs Act to child/dependent credits/exemptions including the Child Tax Credit, Additional Child Tax Credit, Other Dependent Credit, and Exemptions. Be sure to review the instructions for details on each credit. You must determine if the taxpayer/dependent meets the requirements and indicate this in data entry, as applicable. See Related Links below for more information about Drake Tax data entry. 

Requirement

2017 and Prior

2018 and Future

SSN requirements

Child must have a valid SSN before the due date of the return’s Due date (Including extensions).

If acquired after the due date (including extensions), the taxpayer cannot claim either CTC or ACTC for that child on the original or an amended return.

ITIN requirements

If claiming a CTC or an ACTC for a child identified on the return with an ITIN, you must complete Part I of Schedule 8812.

An ITIN is for tax use only and may expire under certain conditions. See the W-7 Instructions for details.

Although a child may be a dependent, the taxpayer may claim a CTC or an ACTC ONLY for a dependent who is a citizen, national, or resident of the United States.

To be treated as a resident of the United States, a child generally will need to meet the requirements of the substantial presence test. For more information about the substantial presence test, see Pub. 519.

Child cannot have an ITIN

Qualifying children must meet ALL requirements listed

1. The child is the taxpayer’s son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of them (for example, the taxpayer’s grandchild, niece, or nephew).

2. The child was under age 17 at the end of the tax year.

3. The child did not provide over half of his or her own support for the tax year.

4. The child lived with the taxpayer for more than half of the tax year (see Exceptions to time lived with you, later).

5. The child is claimed as a dependent on the return. See Pub. 501 for more information about claiming someone as a dependent.

6. The child does not file a joint return for the year (or files it only to claim a refund of withheld income tax or estimated tax paid).

7. The child was a U.S. citizen, U.S. national, or U.S. resident alien. For more information, see Pub. 519, U.S. Tax Guide for Aliens. If the child was adopted, see Adopted child, later.

Adopted Children

An adopted child is always treated as the taxpayer’s own child. An adopted child includes a child lawfully placed with the taxpayer for legal adoption. This satisfies requirement 1 listed above.

If the taxpayer is a U.S. citizen or U.S. national and the adopted child lived with them all year as a member of their household for the tax year, that child meets requirement 7 listed above.

Exceptions to time lived with you

A child is considered to have lived with the taxpayer for more than half of the tax year if the child was born or died in the tax year and the taxpayer’s home was this child's home for more than half the time he or she was alive.

Temporary absences by the taxpayer or the child for special circumstances, such as school, vacation, business, medical care, military service, or detention in a juvenile facility, count as time the child lived with the taxpayer.

There also are exceptions for kidnapped children and children of divorced or separated parents. For details, see your tax return instructions for column (4) of the section on Dependents. (pages 20-24)

TIN requirements for the filer


TIN requirements for the filer

Both Taxpayer and Spouse (if applicable) must have an ITIN by the due date of the return (including extensions). If acquired after the due date (including extensions), the taxpayer cannot claim either CTC or ACTC on the original or amended return for that year.

  • If filer(s) applied for an ITIN on or before the due date of the return (Including extensions) and the IRS issues the ITIN because of the application, the IRS will consider the ITIN as issued on or before the due date of the return.

Credit Details

 

CTC Maximum credit

$1,000 per child

$2,000 per child

Phase-out for CTC limits

MFJ - $110,000

MFS – $55,000

All other statuses - $75,000

MFJ - $400,000

All other statuses - $200,000

ACTC Maximum Credit

$1,000 per child

Within that limit, the ACTC is the larger of:

  • 15% of the taxpayer's earned income over $3,000
  • or for taxpayers with three or more qualifying children, the greater of
    • 15% of the taxpayer's earned income over $3,000
    • or the excess of the taxpayers Social Security taxes for the year over the taxpayer's earned income credit for the year.

$1,400 per child

Within that limit, the ACTC is the larger of:

  • 15% of the taxpayer's earned income over $2,500
  • or for taxpayers with three or more qualifying children, the greater of
  • 15% of the taxpayer's earned income over $2,500
  • or the excess of the taxpayers Social Security taxes for the year over the taxpayer's earned income credit for the year.

Earned Income Threshold

$3,000 (ACTC)

Can elect to use 2016 earned income (2017 ONLY)

$2,500 (ACTC)

Available credits for Non- Qualifying dependents

None

Other Dependent Credit (ODC)

$500 Maximum credit per dependent

  • Dependent must have an ITIN, ATIN, or SSN by the due date of the return (including extensions). If acquired after the due date (including extensions), the taxpayer cannot claim ODC for the dependent on original or amended returns for that year.
  • dependent must be a U.S. citizen, U.S. national, or U.S. resident alien
  • If applied for an ITIN or ATIN on or before the due date of the return (Including extensions) and the IRS issues the ITIN or ATIN as a result of the application, the IRS will consider the ITIN or ATIN as issued on or before the due date of the return.

Exemptions

Yes, taxpayer, spouse (if applicable), and each dependent.

Up to $4,050 per exemption

No Longer Exists

Refundable?


CTC

No

ACTC

Yes

ODC

No

Exemptions

No

 

Publication links

2017 Pub 972

2018 Pub 972




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