Tax Guide 2019
MARCH 2019 MONEY.COM (^47)
You’ve Got
Kids
WHAT CHANGED?The enlarged standard deduction is a big
boon for taxpayers. But to make it possible,
policymakers had to rejigger many other parts
of the tax code, including some that have long
benefited parents. The result is a complicated
set of tradeoffs that should leave most—but not
all—families better off.
To offset the cost of expanding the standard
deduction, one of the bill’s most expensive pro-
visions, Congress eliminated another longtime
perk: the $4,050 personal exemption that
taxpayers could previously claim for them-
selves, a spouse, and each dependent. Because
taxpayers could claim an exemption for each
child, simply eliminating the provision would
have meant tilting the benefits of the tax code
away from parents.To fix this, Con-
gress sweetened an-
other perk targeted
at families—dou-
bling the value of the
Child Tax Credit to
$2,000 from $1,000
and dramatically
raising the income
threshold at which
it begins to phase
out, to $400,000
for couples from
$110,000, ensuring
that many more
families will be
able to take it. The
change “will benefit
families across the
income spectrum,”
says Tax Foundation
analyst Erica York.HOW FAMILIES
FAREA married couple
with two small chil-
dren who earn
$80,000 and don’t
itemize will end up
owing about $2,240less in 2019, accord-
ing to the Tax Policy
Center’s tax calcula-
tor. With a third
child, their savings
would increase to
nearly $2,620.THE NEW
CREDIT’S LIMITSSome tax experts
have complained the
new Child Tax Credit
isn’t as generous to
low-income families
as it might have
been. While the old
$1,000 version was
refundable (with
certain restrictions),
only $1,400 of the
new credit is. That
means families with-
out $2,000 of in-
come tax liability
per child won’t be
able to claim the
full amount.KIDS’ AGES
MATTERUnder the old rules
you could claim an
exemption for each
child under age 19,
as well as any child
age 19 to 24 who was
also a student. By
contrast, the new,
expanded Child Tax
Credit is available
only for kids age 16
and under. To ad-
dress this discrep-
ancy, Congress cre-
ated yet another new
perk: a $500 non-
refundable tax credit
for any dependent
who isn’t eligible for
the Child Tax Credit.