One of the changes the recently passed tax made to existing laws doubled the amount of money families can claim under the Child Tax Credit, from $1,000 up to $2,000.
For 2018, families can claim this credit for each of their children who is 16 years old or younger at the end of the year – $2,000 for one, $4,000 for two, and so on and so forth. This is a reduction in tax liability, which means that if you owe taxes at the end of the year, you can use the credit to bring the bill down.
Because the Child Tax Credit is a refundable credit, you could even find yourself getting extra money back after taxes. Up to $1,400 of the credit is now refundable, but that figure is capped at 15 percent of your earned income over $4,500. If you have questions about how much of the refundable credit you can receive, make sure to speak with your attorney for the full details.
The Child Tax Credit should be addressed in any divorce agreement where children 16 years old and younger are involved. It’s important to note that the IRS has not yet issued guidance clarifying whether or not this credit can be transferred back and forth between parents every year, but it will likely follow the same procedures as dependency exemptions used to with Form 8332. Additionally, single parents making more than $200,000 per year cannot take full advantage of the credit, and heads of households and single parents making more than $240,000 per year cannot use the credit at all.
Our Colorado divorce lawyers here at The Harris Law Firm work tirelessly to ensure that our clients are put in the best possible position throughout the legal proceedings, and take advantage of every legal angle possible. If you are looking to hire an experienced and passionate family law attorney, give us a call at (303) 622-5502 to discuss your situation over the phone, or send us your information through our online form to set up a case evaluation.