Refundable Credits
Changes to the Child Tax Credit

The Tax Cuts and Jobs Act doubled the Child Tax Credit to $2,000 per qualifying dependent. The threshold for claiming the credit was lowered to $2,500, and it phases out for taxpayers earning $200,000 or more ($400,000 if married filing jointly). The Child Tax Credit before tax reform was not refundable, but going forward, it is partially-refundable up to $1,400.

Changes to the Child Tax Credit

The Tax Cuts and Jobs Act doubled the Child Tax Credit to $2,000 per qualifying dependent. The threshold for claiming the credit was lowered to $2,500, and it phases out for taxpayers earning $200,000 or more ($400,000 if married filing jointly). The Child Tax Credit before tax reform was not refundable, but going forward, it is partially-refundable up to $1,400.

Who Qualifies?

The new tax act didn’t just affect the value of the Child Tax Credit. It also changed who can qualify for the credit. The TCJA says that qualifying dependents now must possess a Social Security Number. Parents and guardians can no longer claim the credit for dependents with an ITIN.

A $500 tax credit for dependents with an ITIN

If your client’s dependent does not have a Social Security Number, they cannot qualify for the $2,000 Child Tax Credit, but they may still be eligible for a new $500 family tax credit. The TCJA makes this non-refundable credit available to taxpayers whose dependents have an ITIN, are age 17-24, are disabled or elderly.

Changes to alimony deductions

If your client’s divorce is finalized or their alimony agreement is modified on or after Jan. 1, 2019, then alimony payments cannot be deducted from the payer's taxable income for 2019. If your client is the one receiving alimony, it should not be reported as part of their taxable income.

Expansion of the 529 Savings Plan

Under the new TCJA, clients with a 529 savings plan can use money from their plan to cover up to $10,000 per year of qualifying expenses for any school and any grade, K through 12. This includes public, private, and religious institutions as well.

Changes to the kiddie tax

If your client is reporting over $2,100 in unearned income for dependents under age 19 (or college students under 24), that income will now be taxed at the rate for trusts and estates on returns filed in 2019. Those rates are as follows:


Interest and Short-Term Capital Gains
Up to $2,550 = 10%                                   
$2,550 - $9,150 = 24%                              
$9,150 - $12,500 = 35%                              
Over $12,500 = 37%

Long-Term Capital Gains and Dividends
Up to $2,600 = 0%
$2,600 - $12,700 = 15%
Over $12,700 = 20%