The new tax bill that came into force after President Trump signed the GOP’s tax bill brought out certain tax amendments. The child tax credit is among the tax policies that underwent a change. The earlier $1,000 child tax credit has been increased to $2,000, and this will be in effect when you file taxes in April 2019. Unlike tax deductions, the tax credits are a dollar-to-dollar reduction on the tax bill you receive.

Child tax credit has certain criteria to be met before you can claim it. In order to be eligible for child tax credit, these requirements are to be fulfilled:

• The age of the qualifying child must be under 17 at the end of the year.
• The qualifying child must be either of these: U.S. citizen, U.S. national, or a U.S. resident alien.
• The child mustn’t be earning more than half of their expenses.
• The child must be claimed as your dependent on the federal income tax return.
• The said child must have lived with you for more than half of the tax year.

In addition to these factors, the parents’ income also has an impact on the child tax credit.

A lot has been said about child tax credit, but people seldom have a clear idea of what it is, and how it functions. So, here are a few things you should know before claiming child tax credit.

What is the child tax credit?
Child tax credit aims at boosting the income of the parents or guardians of dependent children. This is different from a tax deduction; it is a tax credit and results in a direct reduction in the amount of money you owe the IRS. Moreover, the child tax credit is not refundable currently, but when the new tax laws come into effect, it will become refundable.

Using child tax calculator
Since calculating child tax credit isn’t easy, you can use the child tax credit calculator to accomplish this feat without any hassle. The child tax credit calculator would require you to fill in the right details in the columns and would calculate the child tax credit accordingly. The child tax credit calculator requires you to fill in the number of qualifying children, your adjusted gross income, earned income, filing status, i.e., whether it is a single filing, married joint filing, married separate filing, head of household, or qualifying widow/widower. In addition to these, you need to enter your total tax liability, foreign tax credit, child care credit, education credit, retirement credit, energy credit, electric vehicle credit, elderly or disabled credit, and a total number of other credits.

However, you need to consider certain factors before you decide to claim child tax credit, and the child tax income phase-out is one such factor. It is imperative for you to know that when the modified adjusted gross income (MAGI) increases, the child tax credit begins to phase-out as well; you will receive $50 less in the child tax credits for every $1,000 or a portion of $1,000 that the modified AGI is more than:

• $75,000 if you are filing as single, qualifying widow/widower, or head of household.
• $110,000 if married filing jointly
• $55,000 if married filing separately.

These factors are essential since they decide whether you are eligible for claiming the child tax credit.

The additional child tax credit
After deriving the amount of child tax credit, you are eligible for the help of a child tax credit calculator. Now, you need to consider another factor i.e, the additional child tax credit. As mentioned earlier, the child tax credit is non-refundable, and if the amount of child tax credit you are eligible for is greater than the money you owe the IRS, it is imperative for you to know that you cannot claim the difference in your tax refund. If you wish to get that money, you need to file for the additional child tax credit if you are eligible. In order to be eligible to file for additional child tax credit, you need the following conditions:

• Your earned income must be more than $3,000 for the year.
• You must have at least three or more qualifying children.

The American Recovery and Reinvestment Act (ARRA) passed in the year 2009, expanded the eligibility for the additional tax credit to $3,000, and this led to an increase in the number of taxpayers eligible for the credit and the amount they could claim. After acquiring the numbers from the child tax credit calculator, you can decide whether you have to apply for the additional child tax credit.

Another important aspect you need to consider while claiming the child tax credit is that you cannot carry forward any portion of the child tax credit for future use; you need to stake claims for the nonrefundable credits in the right order to avail of the maximum benefits. You need to calculate all your other credits appropriately before you use the child tax calculator for deriving the exact child tax credit that you will claim later.