Personal and Dependent Exemptions
In 2017, you were allowed an exemption for yourself, your spouse and any eligible family members such as children. The amount was $4,050 per person in 2017. For a family of four, that was a $16,200 reduction in taxable income. Exemptions have been eliminated for tax year 2018. However some of the changes below may more than make up the difference.
Child Tax Credit
If you have a qualifying child under the age of 17, you may be able to take a Child Tax Credit. While this credit is not new, there are major changes:
- The maximum credit increased from $1,000 to $2,000 per qualifying child.
- The credit begins phasing out at $400,000 for couples and $200,000 for singles.
Additional Child Tax Credit
The maximum additional child tax credit increased to $1,400. This credit has income limits and is applied after the child tax credit.
If you have children or other dependents who do not qualify for the child tax credit, there is a new $500 family credit. These dependents include qualifying children or qualifying relatives, such as dependent children who are age 17 or older, or parents or other qualifying relatives that you support. To qualify the dependent must have no other income.
What does this mean?
For families with children over age 17, you might get a tax bite. Additional taxes will be paid by those families supporting siblings and/or parents. But overall, young families will enjoy a reduction in tax.