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Child Tax Credit 2018: What’s New, and Requirements to Qualify

What you need to know about the Child Tax Credit, the Child and Dependent Care Credit, and the Earned Income Tax Credit.
Oct. 15, 2018
Personal Taxes, Taxes
Do You Qualify for the Child or Child Care Tax Credit?
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The Child Tax Credit is a tax credit worth up to $2,000 per qualifying child and $500 per qualifying dependent in 2018. It is one of three kid-focused federal tax credits that are among the most effective ways to reduce your tax bill.

The Child Tax Credit

What it is and how much you can get

  • The Child Tax Credit offers up to $2,000 per qualifying dependent child 16 or younger at the end of the calendar year.
  • New in 2018 is a $500 nonrefundable credit for qualifying dependents other than children.
  • This is a tax credit, which means it reduces your tax bill on a dollar-for-dollar basis. Up to $1,400 of the Child Tax Credit is refundable; that is, it can reduce your tax bill to zero and you might be able to get a refund on anything left over.

How to qualify for the Child Tax Credit

You can take full advantage of the credit only if your modified adjusted gross income is under:

Some of the other child-related eligibility requirements for the Child Tax Credit include:

  • You must have provided at least half of the child’s support during the last year, and the child must have lived with you for at least half the year (there are some exceptions to this rule; the IRS has the details here).
  • The child cannot file a joint return (or file it only to claim a refund).
  • The child has to be 16 or younger by the end of the calendar year.

Most online tax preparation software will lead you through the process and calculate the credits for you.

The child tax credit is one of three kid-focused federal tax credits that are among the most effective ways to reduce your tax bill.

The Child and Dependent Care Tax Credit

What it is and how much you can get

  • The Child and Dependent Care Credit can get you 20% to 35% of up to $3,000 of child care and similar costs for a child under 13, an incapacitated spouse or parent, or another dependent so that you can work (and up to $6,000 of expenses for two or more dependents).
  • The percentage of allowable expenses decreases for higher-income earners — and therefore the value of the credit also decreases — but it never disappears completely.
  • This credit is not refundable, which means it can reduce your tax bill to zero but you won’t get a refund on anything left over from the credit.
  • Some states also offer their own versions of this credit for child care and dependent care. They are often simply a percentage of the federal credit, but your state could expand eligibility, adjust the income thresholds or provide other incentives.

How to qualify for the Child and Dependent Care Tax Credit

  • A dependent child must be 12 or younger at the time the child care is provided.
  • Spouses and other dependents don’t have an age requirement, but IRS rules say they must have been physically or mentally incapable of self-care and must have lived with you for more than half the year.
  • If you’re married, you must file as married filing jointly.
  • You must have earned income — money you earned from a job. Investment or dividend income doesn’t count.
  • You must provide the care provider’s name, address and Taxpayer Identification Number — either a Social Security number or an Employer Identification Number.

You can’t claim the credit for payments to care providers who are:

  • Your spouse
  • A parent of the dependent child
  • A dependent listed on your tax return
  • Your child who is age 18 or younger, even if they’re not listed as a dependent on your return

Keep in mind that qualifying expenses can go beyond physical care and extend to household expenses such as paying someone to help with cooking and cleaning.

The Earned Income Tax Credit

What it is and how much you can get

The Earned Income Tax Credit is specifically designed to benefit working people with low incomes.

The table shows both the maximum credits and the maximum income allowed before losing the benefit.

2018 Tax Year Earned Income Tax Credit

Number of childrenMaximum creditMax earnings
single filers
Max earnings
married filers
0$519$15,270$20,950
1$3,461$40,320$46,010
2$5,716$45,802$51,492
3 or more$6,431$49,194$54,884

2017 Tax Year Earned Income Tax Credit

Number of childrenMaximum creditMax earnings
single filers
Max earnings
married filers
0$510$15,010$20,600
1$3,400$39,617$45,207
2$5,616$45,007$50,597
3 or more$6,318$48,340$53,930

How to qualify for the Earned Income Tax Credit

  • You have to file a tax return to get this credit, even if you don’t owe tax and are not legally obligated to file a return.
  • This tax credit is refundable. So, if you’re due to receive a credit of $5,000 but you owe only $2,000 in taxes, you might get a check for $3,000.
  • A number of states offer some version of an earned income tax credit for working families, so you might be able to get that credit, too.
  • Most online tax preparation software will lead you through the process and calculate the credits for you.

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