If you have a child or someone you support almost entirely, there’s a good chance you’re eligible for one of these tax breaks.
The Child Tax Credit is a tax break that can benefit people with children under the age of 17. You can get up to $2,000 for each child you claim.
The Other Dependent Tax Credit is a new $500 tax break for people with dependents who are 17 or older, not necessarily related to them, or have an Individual Taxpayer Identification Number (ITIN) instead of a Social Security number. You’ll get $500 for each dependent you claim.
One thing to note about the Child Tax Credit – it can come with a “refundable credit” depending on your income and how many children you claim.
Here’s an example of how refundable credits work:
Mary owes $1,675 in taxes and received a Child Tax Credit of $2,000. The tax she owed was reduced to zero, and the remaining $325 was converted to another credit called the Additional Child Tax Credit, which was refunded to her. If Mary didn’t qualify for the Additional Child Tax Credit, the remaining $325 would have been lost.
The Credit for Other Dependents doesn’t have a refundable portion like the Child Tax Credit.