Tax credit alert! If you are a U.S. taxpayer and have dependents, you are in for a tax-saving news! You may be eligible to claim a number of different tax credits if you are the earning head of a family and have dependents.
There are various such tax credits available to help ease your tax liabilities. One such is the child tax credit. You may avail this tax credit if your dependents meet a series of prerequisites for such benefits. There are chances that all your dependents might not pass the test, but then there are always chances that some might. In case, when a dependent doesn’t meet the prerequisites of the child tax credit, you may be able to claim the credit for other dependents.
You can avail this tax credit while filing your next year’s federal income tax returns. Let’s look at some really intriguing information about tax credit for other dependents.
Circumstances in which you cannot claim the tax credit for other dependents?
There are various types of child tax credits that you may avail to reduce your tax liabilities. The most popular ones are the child tax credit and the additional child tax credit. The tax credit for other dependents only comes to the picture when your dependents don’t qualify for either of the two aforementioned tax credits. Therefore, if your dependents qualify for the child tax credit or the additional child tax credit, then you will not qualify to avail the credit for other dependents for those particular dependents.
What type of dependents qualify for this tax credit?
If you are a U.S. taxpayer, then dependents like your older child, parent, or cousin might qualify for the tax credit for other dependents. The essence of this tax credit is that it is not necessary for a dependent to be related to you for you to qualify and earn this tax break. You may avail the tax credit for other dependents for unrelated individuals who depend on your income for at least the whole of the tax year in question.
What is the maximum amount of such tax credit?
The maximum amount which you may earn as tax credit for other dependents is $500 per qualifying dependent.
Does the dependent need to be a U.S. citizen for you to qualify for the tax credit for other dependents?
You may claim the tax credit for other dependents if your dependents are U.S. citizens, U.S. residents, or U.S. resident aliens.
What do you need to do to avail this tax credit?
If you are eligible for the tax credit for other dependents, then you can claim it by following a simple process. You would be required to include the following data of all the dependents while filing your federal income tax returns:-
- Social security number or
- Individual taxpayer identification number
What is the income threshold to avail this tax credit?
The income threshold for you to be eligible for this dependent’s tax credit is $200,000 if you are filing individually, and $400,000 if married and filing jointly. The income in consideration is the modified adjusted gross income.
How to know if you qualify for the tax credit for other dependents?
It’s very easy to find out if you qualify for this tax credit or not. You may use the worksheet on Page number 6 of the publication 972 – Child Tax Credit and check if you qualify to avail this tax credit.
In conclusion, we may say that being aware of such tax updates can help you get a good tax break by reducing your liabilities. It is advisable that you keep yourself updated with the latest tax news and make the most of such tax credits. You can contact your MyTaxFiler expert to get the gist of all such tax credits and plan your taxes promptly. Doing so would enable you to be ready with all the documents and the amount of payable taxes in the next year.