How to save up to $2,000 on Taxes

save money on taxes
save money on taxes

To Save money on taxes can be difficult. But Parents can now get a cost-effective tax credit worth up to $2,000 per qualifying child on their tax return in 2019. Because Uncle Sam has made it beneficial for eligible families to slash their tax bills and save some money with the Child Tax Credit. If you have one or more qualifying dependent children under the age of 17 at the end of the year, you are eligible to claim the credit and get a reduction on your tax bill on a dollar-to-dollar basis. Sounds great, isn’t it? So, to take advantage of the Child Tax Credit, here’s what you need to know.

National Resource Connect has done all the research for your investment strategy to save money on taxes. So, lets look at how do we save smart.

How to Qualify and Save Money on Taxes:

Uncle Sam seems kind enough to taxpayers who are working hard, day-in and day-out for their families. To qualify for the Child Tax Credit, your child must meet the following criteria:

  • They Must be a U.S. citizen or resident
  • Under the age of 17 at the end of the year
  • Must live with you more than half of the year
  • Must be your child, stepchild adopted or foster child or a grandchild.
  • They may even be your siblings, step-siblings, half-siblings or a niece, or nephew who lives with you.
  • Must have a Social Security number

The Child Tax Credit is a major cutback if your income level is below a certain threshold. You can claim the credit worth up to $2,000 per qualifying dependent for 2019 if you had an earned income of at least $2,500. This amount phased out for income level above $200,000 for single filers and $400,000 for married filing jointly. The Child Tax Credit helps you in offsetting the amount you owe Uncle Sam. Great relief for parents!

To add more, this credit is refundable. If your Child Tax Credit exceeds the amount of taxes you owe, you may receive a refundable balance up to $1,000 per qualifying child, known as the Additional Child Tax Credit (ACTC). This refundable part of the credit is limited to 15% of qualifying earnings above $2,500.

Another good thing is that for those non-child dependents are over the age of 17 and do not qualify for the Child Tax Credit, a $500 non-refundable credit is available to taxpayers.

save money on taxes
save money on taxes

Eligibility of Dependents for the Child Tax Credit

To claim the Child Tax Credit for 2019, your dependent child has to meet the qualification criteria of six tests laid by the IRS.

  1. Age Test: The child must be under the age of 17 – 16 or younger – at the end of the year.
  2. Relationship Test: The child must be your son, daughter, stepchild, foster child, adopted child, brother, sister, stepbrother, stepsister, half-brother or half-sister, niece or a nephew, or your grandchild.
  3. Support Test: The child must not have provided more than half of their support.
  4. Dependent Test: The child must be claimed as your dependent on your federal tax return.
  5. Citizenship Test: The child must be a U.S. citizen, resident or national.
  6. Resident Test: The child must have lived with you for more than half of the year.

How to Claim the Child Tax Credit?

Claiming the Child Tax Credit is easy. Wondering how? Once you determine if you qualify for the credit, you can claim the CTC on Form 1040, Form 1040-SR, or Form 1040NR. To know the exact amount of credit, you qualify for, you can use the Child Tax Credit and Credit for Other Dependents Worksheet. You can also calculate the amount of your tax refund by using the FREE Tax Calculator.

To make both ends meet is not an easy task. Hence, it is imperative to take the right decision at the right time, every buck counts.

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