Lesson 14

Credits - Part 2

Child Tax Credits

Additional Child Tax Credits

Credit for Other Dependents

Section G & I

VITA/TCE

TRAINING 101

In this presentation we will cover:

​

Dependent Credits:

• Child Tax Credit (CTC) – Non Refundable Credit
• Additional Child Tax Credit (ACTC) – Refundable Credit
• Other Dependent Credit (COD) - Non Refundable Credit

You are not expected to memorize any of this– just be familiar with it.

And how to use your PUB 4012

Dependents Refresher

PUB 4012 Section C

​

The dependent must pass at least one of these test in order to be claimed

as a dependent on the tax return.

5

Remember Section C

PUB 4012

Qualify for Child Tax Credit

• Up to $2,200 Non-refundable credit per qualifying “Child”
• May possibly qualify for a Refundable Child Tax Credit and EITC.

Credit for Other Dependents

Up to $500 Non-Refundable Credit

Yes

No

You can easily see tell what they qualified for here-or if there might be a mistake.

​

Dependent Passes This Test?

​

Yes

Dependent Passes This Test?

Under 17, have a Social Security Number, and Live in U.S.?

Child Tax Credit & Additional Child Tax Credit

7

To Qualify:

• Dependent Children Under 17 on Dec 31^st of tax year.
• Children must have work-eligible Social Security Numbers

(by tax season deadline; or Oct 15 if an extension was filed)

• Children must have lived in U.S. for over 6 months during tax year.
• NEW—At least 1 parent on the return MUST have a Social Security Number to get CTC!!!!

​

2026 Non-Refundable Credit Up to $2,200 per child.

​

Remember—Non-refundable credits pay tax liability and the

excess credits are usually lost.

​

**Child Tax Credits are unique because It might be possible

to qualify for refundable Child Tax Credits.

​

CHILD TAX CREDIT (CTC)

System calculates amount automatically.

8

• Refundable portion of Child Tax Credit- has additional requirements

​

To Qualify:

• Dependent Child Under 17
• Child and at least 1 parent must have work-eligible Social Security Numbers

(by tax season deadline; or Oct 15 if an extension was filed)

• Children must have lived in U.S. for over 6 months during tax year
• Taxpayers Must have at least $2,500 in earned income

​

Amount of Additional Child Tax Credit:

= The Unused portion of Child Tax Credit

UP TO $1,700 per child.

Actual amount received depends on total earned income and # of qualifying children.

ADDITIONAL CHILD TAX CREDIT (ACTC)

System calculates amount automatically.

Proposed Federal Public Benefit Regulations - Schedule 3-A

This is still a proposed change- not definitive yet.

If this passes- guidance will be provided

Treasury and the IRS have proposed treating the refundable portion of certain tax credits as a Federal Public Benefit.

The proposal may impact:

• Earned Income Credit (EIC)
• Additional Child Tax Credit (ACTC) 🡨
• Refundable American Opportunity Credit
• Refundable Adoption Credit

​

If these credits become classified as "Federal Public Benefits"

• The proposal would create an additional eligibility requirement
• The draft Schedule 3-A indicates taxpayers may need to certify citizenship, nationality, or qualified alien status in order to receive the refundable credits.

10

ACTC- Example # 1

This Taxpayer had one dependent child, age 10, who lived in the U.S. all year. Taxpayer had earned income.

​

They qualify for a Child Tax Credit of only $1,448 to pay their Income Tax.

​

​

Since the taxpayer had earned income of over $2,500, they also qualified for the ACTC.

$2,200 CTC

- 1,448 Already Applied Line 19

$ 752 Additional CTC

​

So the remaining $752 was issued as a Refundable Credit.

11

ACTC- Example # 2

This Taxpayer had one dependent child, age 10, who lived in the U.S. all year. Taxpayer does NOT have earned income.

​

They qualify for a Child Tax Credit of only $1,763 to pay their Income Tax.

​

​

Child Tax Credits are $2,200 but since they DO NOT have Earned Income , they do not qualify for the ACTC.

​

So they will NOT get the remaining $437.

Other Dependent Credit

13

For ALL Other Dependents on return that DO NOT qualify for Child Tax Credit:

• Dependents 17 or over
• Dependents that are not your children (like parents, friends)
• Dependents that have ITINs instead of Social Security Numbers
• Dependents that didn’t live in the U.S. for more than 6 months

​

• Amount of Credit:
• Up to $500 Non-refundable credit (can just pay income tax liability)

​

Other Dependent Credits (ODC)

System calculates amount automatically.

Please note the system will automatically apply the correct credits to the return based on age, income, relationship, and filing status entered.

You can see what credits the system is assigning

to the dependent on page 1 of the 1040.

Section G

WOO-HOO!!!

You Did it!

Next Up:

Dependent Care Credit