More Taxpayers Will Qualify For The Child Tax Credit
There is great news for parents in the middle to upper income tax brackets in 2018. The new tax law dramatically increased the income phaseout threshold for claiming the child tax credit. In 2017, parents were eligible for a $1,000 tax credit for each child under the age of 17 as long as their adjusted gross income (“AGI”) was below $75,000 for single
There is great news for parents in the middle to upper income tax brackets. The new tax law dramatically increased the income phase-out threshold for claiming the child tax credit. In 2017, parents were eligible for a $1,000 tax credit for each child under the age of 17 as long as their adjusted gross income (“AGI”) was below $75,000 for single filers and $110,000 for married couples filing a joint return. If your AGI was above those amounts, the $1,000 credit was reduced by $50 for every $1,000 of income above those thresholds. In other words, the child tax credit completely phased out for a single filer with an AGI greater than $95,000 and for a married couple with an AGI greater than $130,000.
Note: If you are not sure what the amount of your AGI is, it’s the bottom line on the first page of your tax return (Form 1040).
New Phaseout Thresholds Beginning In 2018
Starting in 2018 and for years going forward, the new phaseout thresholds for the Child Tax Credit begin at the following AGI levels:
Single Filer: $200,000
Married Filing Joint: $400,000
If your AGI falls below these thresholds, you are eligible for the full Child Tax Credit. For taxpayers with an AGI amount that exceeds these thresholds, the phaseout calculation is the same as 2017. The credit is reduced by $50 for every $1,000 in income over the AGI threshold.
Wait......It Gets Better
Not only will more families now qualify for the child tax credit but the amount of the credit was doubled. The new tax law increased the credit from $1,000 to $2,000 for each child under the age of 17.
In 2025, a married couple, with three children, with an AGI of $200,000, would have received nothing for the child tax credit. Now, that same family will receive a $6,000 tax credit. That’s huge!! Remember, “tax credits” are more valuable than “tax deductions”. Tax credits reduce your tax liability dollar for dollar whereas tax deductions just reduce the amount of your income subject to taxation.
This information is for educational purposes only. Please consult your accountant for personal tax advice.
About Michael……...
Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.
Equifax Data Breach: How To Protect Yourself
Equifax, a credit agency, had a data breach that resulted in an estimated 143 million people having their personal information compromised. Surprisingly enough, the greatest risk is right not now but rather a few months down the road. After your data is stolen, your information is sold on the black market, and then the bad guys figure out how they
Equifax, a credit agency, had a data breach that resulted in an estimated 143 million people having their personal information compromised. Surprisingly enough, the greatest risk is right not now but rather a few months down the road. After your data is stolen, your information is sold on the black market, and then the bad guys figure out how they are going to use your personal information to maximize their financial gain. So there is delay between the time that your information is stolen and when the fraudulent activity using your data begins.
In this article we are going to discuss the top ways to protect your credit from fraudulent activity. Here are the main steps
Monitor your financial activity closely
Run a free credit report
Consider "Freezing" your credit
Step 1: Monitor Your Financial Activity Closely
Make sure you keep a close eye on each transaction running through your checking account and credit card. This is often the first place that signs of fraudulent activity surfaces. If for some reason you cannot identify a charge to your card or bank account, make sure you contact your financial institution immediately.
Use Credit Cards, Not Debit Cards
Along these lines we strongly recommend that you use a credit card instead of a debit card and just payoff the balance of the credit card each month. If your debit card information is compromised and the "bad guys" charge $1,000 to the card, the $1,000 is actually pulled out of your checking account. You now have to report the fraudulent activity and get your money back. Instead, if your credit card is compromised and they make the $1,000 fraudulent transaction, you notify the credit card company but you are not out the $1,000. They just remove the charge from the bill and the credit card tracks down the bad guys. You should only be using your debit card for ATM withdrawals.
Step 2: Run A Free Credit Report
You should get in the habit of running a credit report on yourself once a year. These credit reports list all of your current creditors: car loans, mortgage, credit cards, store charge accounts, credit lines, etc. If you see a creditor on the list that you cannot identify that is a big red flag. If your data is compromised, the bad guys may use your data to apply for a credit card without your knowledge. The only way that you would find out that the fraudulent account existed is by running a credit report on yourself. Running your credit report once a year does not hurt your credit score. It's only if you are running your credit report more frequently that it could impact your credit score. Frequent credit runs can give the impression that you are eagerly searching for more credit and it can lower your credit score.
You can run a free credit report at www.annualcreditreport.com or you can request one from your bank or credit union.
Step 3: Consider Freezing Your Credit
One of the best ways to protect yourself is to freeze your credit with the 3 credit bureaus. There 3 credit bureaus are:
Equifax
Experian
TransUnion
A credit freeze means if someone tries to access your credit to establish a credit card, car loan, whatever it is, the request for the credit report will reject. When you set up the credit freeze each of the bureaus will you with a login or a pin number that allows you to "unfreeze" your credit for a selected period of time. If you have implemented a credit freeze and you apply for a car loan, you would follow the steps below:
Ask the dealership which credit bureau they run their reports through
Login to your account at that credit bureau
Unfreeze your credit report for a selected period of time
Notify the dealership of the limited time window to request the credit report
The window will automatically close and your credit will "re-freeze"
The credit freeze is simple to implement and it can be implemented by visiting the website of each credit bureau. You can also implement the freeze by calling the credit bureau but the on hold wait time is so long that we recommend to our clients implement the freeze via the web.Below is great video that walks you though what the online freezing process looks like:
Don't Use Public Wifi
One last tip to protect your information, do not use public wifi networks. It's tempting if you are at a coffee shop, hotel, or airport to access their free wifi network but it's the wrong move. There are individuals that have special programs that hack into the wireless network and see everything that you are looking at on your laptop or mobile device. If you are going to use a wireless network, make sure it is secure.
About Michael.........
Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.
