Claiming a child and the tax benefits that come with that is one of the few benefits of having a child (kidding, of course).
Jodie writes in, “I heard there’s a lot of changes with claiming dependents for 2018. Can I claim my children on my 2018 tax return? If yes, what benefits come with that? Thanks!”
Thanks for writing, Jodie. The rules for claiming dependents for tax purposes have changed drastically for this tax year. Claiming a dependent yields no exemption this tax year. Previously, for every dependent you claimed, you could claim an exemption from your income worth $4,050.
This year, if you claim your children, you will not be able to claim that exemption, however there are still some tax benefits that go with having a dependent child.
First, How Do I Know If I Can Claim My Child?
I won’t go into the details here, but if you would like to know the process of determining if you have a dependent child, click here to review the tests you would need to go through.
Second, If I Can Claim My Child(ren), What Benefits Are There?
While excluding the dependency exemption is no longer a benefit for claimants, there is still credits that can be claimed. First, there is the Earned Income Tax Credit (EITC). For the rules for determining if you can claim the EITC and whether your child qualifies as a qualifying child, click here.
Next, there is the Child Tax Credit. Previously, claiming the Child Tax Credit yielded a credit against your tax liability of $1,000. For tax year 2018, the Child Tax Credit is worth $2,000 per qualifying child and up to $1,400 of that is refundable.
Simply put, the Child Tax Credit was improved upon and made more favorable for the average taxpayer. This was meant to somewhat offset the disadvantage of no longer being able to claim dependents for the exemptions.
I hope this short guide was helpful and if you have any questions regarding taxes or finance, please email or leave it in a comment below. Thank you.
This article is not intended to be financial, tax, or legal advice. For specifics on claiming your children and what benefits you can receive, please talk to a local professional.