What the child tax credit is about and why is it considered one of the nonrefundable tax credits?
Although the child tax credit is under the nonrefundable tax credits, a huge amount is still possible to be received by a qualifying child. (Photo: Money)
One Of The Nonrefundable Tax Credits
The child tax credit is one of the nonrefundable tax credits that can reduce your federal income tax liability to zero. This specific tax credit among other nonrefundable tax credits is a dollar-for-dollar credit, meaning the amount you receive in credits is subtracted from your tax bill.
While this specific tax credit that is under the nonrefundable tax credits cannot generate a refund, it can provide up to $2,000 in cash for each qualifying child. There are certain criteria you must meet to qualify for nonrefundable tax credits such as the child tax credit, including an income limit and having a child under 17 who is your dependent.
One requirement for the nonrefundable tax credits specifically the child tax credit is that the child must have lived with you for over half of the tax year and have a valid Social Security number. You must also not file a joint tax return to claim benefits of the nonrefundable tax credits unless you are trying to recover estimated taxes paid or withheld income taxes.
According to a published article by The US Sun, the maximum amount to possibly receive for the nonrefundable tax credits for each qualifying child is $2,000, with a refundable portion of $1,600 per child. To claim the credit of the nonrefundable tax credits, you must list your children and dependents on your Form 1040 and complete Schedule 8812 to calculate your child tax credits.
Proposed Changes To The Child Tax Credit
In a published article by Fidelity Investment, changes to the CTC are being proposed that could expand eligibility and the refund amount. The CTC can greatly benefit families, and in some cases, can even result in a refund if the credit cancels out the tax bill completely. The amount of the credit depends on the individual’s income, specifically their modified adjusted gross income (MAGI).
