How to make the most of the child tax credit this year

The wallet-emptying experience of raising kids understandably fuels a lot of interest in the child tax credit, but thanks to some big changes recently, the fascination could reach Tickle Me Elmo-like proportions. Here are a few things tax pros say you should know about this credit and how you can take maximum advantage of it on your tax return.

Double down

One of the most notable changes to the child tax credit in 2018 is that it doubled from $1,000 per kid to $2,000 per kid. Even though the end of the personal exemption in 2018 may eat away at some of those tax savings, many parents will most likely see a benefit, says Chad Harrison, a certified public accountant in Mason City, Iowa.

“If everyone’s income was the same as last year, family size the same as last year, and everything was the same as last year compared to this year, the majority of people will come out ahead,” he says. There are other factors to think about, adds Michael Ruger, a partner and chief investment officer at Greenbush Financial Group in East Greenbush, New York. For example, the child tax credit is more potent than a tax deduction. That is, it’s a dollar-for-dollar reduction in your tax bill rather than a reduction in your taxable income. Also, federal income tax rates are broadly lower for most people in 2018 compared to 2017, meaning that even if you had more taxable income this year, it will likely be taxed at a lower rate. And the bigger child tax credit could erase a larger chunk of that tax bill.

Stop assuming you don’t qualify

Last year, the child tax credit started phasing out for single filers with modified adjusted gross incomes over $75,000 and for joint filers with MAGIs over $110,000 . For 2018, however, the phase-out doesn’t start until single filers hit $200,000 MAGI and joint filers hit $400,000.

That’s a game-changer, according to Harrison.

“It has drastically increased the amount of money a person can make and still qualify for

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MARK LENNIHAN — THE ASSOCIATED PRESS FILE PHOTO This is a portion of the 1040 U.S. Individual Income Tax Return form for 2018. The Child Tax Credit changed considerably in 2018.