Daily Archive: January 5, 2018


Changes to the Child Tax Credit for 2018

If you’re like me, you like to get every tax credit you can. I mean, who wants to pay more taxes than they absolutely have to? I can’t think of anyone.

The only problem with tax credits is it’s extremely hard to keep track of them all. While this has always been true, tax credits may be even more difficult to understand since the new tax reform law passed in December 2017. From this point forward, the amount of taxes we pay – and how they are calculated – will be drastically different.

In terms of tax credits, many faced sweeping changes with tax reform. For example, the standard deduction for single tax filers goes up to $12,000 in 2018. For married couples filing jointly and surviving spouses, the credit goes up to $24,000. These higher standard deductions were enacted as a way to simplify our tax code since, from this point forward, there will also be no personal exemptions and fewer available deductions.

Another big change by the Trump Administration was the one made to the Child Tax Credit. Starting in 2018, this tax credit will be bigger and more families will be able to claim it.

If you’re eager to reduce your tax load next year and you have children, you’re probably going to love these changes. Keep reading to learn about the Child Tax Credit in 2018, who qualifies, and how much this credit might help you save on taxes.

IMG - Changes to the child tax credit
Who Can Claim the Child Tax Credit?
First things first. While the income cutoff for the child tax credit used to start phasing out at $110,000 for married couples, taxpayers who are married filing jointly with an adjusted gross income of $400,000 or less can receive the full credit starting in 2018. Individuals with an adjusted gross income of $200,000 will also receive the full credit. Phase-outs for this credit will start at these income levels.

There are, of course, several further conditions which must be examined in order to be certain you qualify for all or some of the Child Tax Credit. They are as follows:

Qualifying children must be citizens or residents of the United States who can be claimed as dependents by the taxpayer. They also must not have reached the age of 17 by the end of the tax year. Children may be your blood children, grandchildren, stepchildren, and/or adopted children. Foster children also fall under this category as long as they have lived in your home for the entire year in question.

You must claim the child as a dependent. You need to claim the child as a dependent on your federal taxes in order to be eligible for the credit.

The child must live with you. The child must have resided in your home for at least half of the tax year, although some exceptions apply.

How Much Can You Claim?
Married couples who make under the $400,000 per year (and individuals who earn less than $200,000 per year) will be able to take $2,000 per child as their Child Tax Credit. This is one of the many tax cuts instituted by President George W. Bush early in his first term.

When the Child Tax Credit came into existence in 1998, the per child amount was $400. Over the years, it has been increased substantially.
Can You Receive The Child Tax Credit as Part of Your Refund?
The Child Tax Credit is helpful for those qualifying families. Generally speaking, it functions as a credit against what the taxpayer owes in taxes. Sometimes, however, it can translate into an actual tax refund or tax rebate.

For a small percentage of families in the United States, the Child Tax Credit will be larger than their tax liability. In this case, part of the unused part of the Child Tax Credit can be refundable as an additional Child Tax Credit.

Here’s the good news you get with the new tax bill: $1,400 of the $2,000 per-child credit is refundable. What this means is, you can receive up to $1,400 of the child tax credit back even if you don’t wind up owing any taxes.
What Does This Mean for My Tax Bill?
What these changes mean for your personal tax bill depends on how much you earn and whether you received the child tax credit in the past. Let’s say you earned an adjusted gross income of $80,000 in 2017 and have two children ages 6 and 8.

In this case, your tax credit for those kids simply doubles. Instead of taking a credit for $1,000 per child like you did in 2017 and previous years, you’ll receive a tax credit of $2,000 per child in 2018.

Now let’s say you are a married couple filing jointly who earned an adjusted gross income of $200,000 last year and have a set of one-year-old twins. Because the tax credit began phasing out at $110,000 and phased out completely well below your level of income in 2017, you didn’t receive a child tax credit last year. In this case, you will receive a $2,000 credit per child for the first time in 2018.

For the most part, increasing the child tax credit is good news for everyone with kids. It won’t affect married couples earning more than $400,000 or individuals earning more than $200,000, but they weren’t receiving a child tax credit under the old law anyway.
The Bottom Line
If you have kids and earn less than $400,000 as a married couple or $200,000 as an individual, changes to the Child Tax Credit will save you money on taxes in 2018. However, your savings may be wiped away in other areas of the tax code, specifically because personal exemptions and several other deductions are being replaced with a higher standard deduction for everyone.

Either way, make sure to speak with a tax professional if you’re unsure how the new tax law will affect you. A bigger child tax credit is always a good thing, but it’s possible you could save even more on taxes with some professional guidance and help.

The post Changes to the Child Tax Credit for 2018 appeared first on Good Financial Cents.


UK productivity grows at quickest pace in six years

But data also show that output during the past decade was worst since the 1820s 


Economists see signs of eurozone price pressure despite soft December inflation


UK productivity jumps at fastest rate for six years

Fewer people working fewer hours but creating same output explains surprise gain, but productivity remains well below pre-financial crisis trend

The productivity of British workers has increased at the fastest rate in more than six years, handing the government a rare boost in correcting one of the biggest problems facing the UK economy.

Labour productivity, or economic output per hour worked, grew by 0.9% in the three months to September 2017, the Office for National Statistics said. Economists said the jump came thanks to stronger growth in factory output, weaker jobs growth and the UK economy generating broadly the same amount of output for fewer hours worked.

Productivity is an economic measure of the efficiency of a workforce. It typically measures the level of output per hour of work, or per worker.

Related: UK’s poorest to fare worst in age of automation, thinktank warns

Continue reading…


Eurozone inflation falls to 1.4%

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