The Child and Dependent Care Credit offer one of the largest amount of credits for your total tax bill. Unlike deductions which reduce the taxpayer’s taxable income, the credits reduce the total amount seen in the tax bill.

So the credits are much more valuable than the deductions. For 2018 through 2025, the Child Tax Credit amount is set to be $2,000 and as much as $1,400 of this amount is refundable. Meaning that if your total tax bill is already $0, you’ll receive $1,400 in your tax refund. The Dependent Care Credit, on the other hand is set to be $500.

Child Tax Credit Qualifications

The Child Tax Credit or CTC for short has a $2,000 value for each qualifying children. The qualifications are

  • Age
    • The child must be under the age of 17.
  • Relationship
    • The child must be directly related to you. He or she can be your own child, stepchild, foster child, adopted child, sister, brother, cousin, etc.
  • Support
    • The child must not provide more than half of her or his finance for the tax year.
  • Residency
    • The child must be living with you for at least half of the tax year.
  • Nationality
    • The child must be a U.S. citizen or a resident alien.
  • Dependency
    • The child must be claimed as a dependent on your tax return.

Once all of these qualifications met (or tests are passed) you can claim the child tax credit.

Dependent Care Credit

If the child is between the ages of 17 and 18 or 19 and 24 but a full-time university or college student, you can claim the dependent care credit.

The only difference between the Child Tax Credit’s qualifications and the Dependent Care Credit’s qualifications is the residency and the age. As long as the dependent is a U.S. national, claimed as a dependent on your tax return, provided less than half of her or his support, and related to you, there is nothing in your way to claim dependent care credit.

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