Brace yourself: Kids no longer count as a dependent exemption...but they do qualify for a pretty hefty tax credit. We checked in with TurboTax expert and CPA Lisa Greene-Lewis to get the scoop on what exactly this important change means.
Tell me more about the dependent exemption. What did that used to look like? Pre-2018, the dependent exemption meant that you could count your kid as a dependent to the tune of $4,050 per head.
What's changed for 2018? The dependent care exemption has been eliminated and the child tax credit doubled. (It's now $2,000 versus $1,000.)
Hold up, is that a good thing or a bad thing? It actually depends on the age of your kids. Since the child tax credit is a dollar for dollar reduction of taxes, that's pretty helpful. (The dependent exemption used to come off your income, but then that income was taxed at a certain rate, so the amount you got back was a percentage versus the full amount.) But if your kids are 17 or older, you'll no longer get a tax break.
How do I know if I qualify? It depends on a variety of factors like how much support you provide your kids and where they reside. Also, if you make more than $400,000 as a married couple or more than $200,000 (if filing as single), your eligibility for the child tax credit goes down significantly.
BRB, calling my accountant. You might want to ask them how to write off your onesies while you're at it.