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An Online Resource Library on Gender-Based Violence.

Other Tax Credits for Low Income Individuals and Families

A number of federal tax credit programs are designed specifically for workers with children and dependents. The goal of these programs is to help workers maintain employment by offsetting the costs related to caring for children and dependents. This section includes general information about tax credits for families, as well as specific information about the Child Tax Credit, the Child and Dependent Care Tax Credit, and the Adoption Tax Credit. In addition, this section explores credits available for those investing in their education and health.

General Information on Tax Credits for Families

NWLC.jpgThe Tax Credits Outreach Campaign Toolkit, a project of the National Women’s Law Center, provides resources advocates and community leaders need to make sure families find out about state and federal tax credits for which they may be eligible. Resources include:

Child Tax Credit
The Child Tax Credit (CTC) is a federal tax credit designed to help working families offset the cost of raising children. First created in 1997, the CTC was expanded through the Economic Growth and Tax Relief Reconciliation Act of 2001, and then again through ARRA in 2009, to provide greater tax relief and make a portion of the credit refundable. Those improvements were then extended through December 31, 2012 in The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This section provides information about the CTC including relevant legislative activity, eligibility, and how to access the appropriate application forms. See callout box below for key changes in the CTC for tax year 2018.

Child Tax Credit Changes for Tax Year 2018

  • Starting in tax year 2018, the CTC is worth up to $2,000 (up to $1,400 is refundable). It is available to workers earning more than $2,500.
  • Children claimed for the CTC must have a social security number (SSN) that authorizes work. A tax filer and spouse (if present) can still have an SSN or an Individual Taxpayer Identification Number (ITIN).
  • Children should be considered a dependent for tax filing purposes.
  • A new credit for dependents is available. A $500 non-refundable credit is available for families with qualifying relatives. This benefits people who previously would claim an exemption for a dependent relative. 

These changes are part of the Tax Cuts and Jobs Act of 2017 and are set to expire in 2026. After this time, CTC eligibility rules will revert to previous requirements. For more information, see the Center on Budget and Policy Priorities' What is the Child Tax Credit? page. Other key changes include:

  • Exemptions are eliminated. Personal and dependent exemptions are no longer part of the tax filing process. The standard deduction has nearly doubled which generally offsets the benefit of claiming these exemptions. This isn’t a critical change, but it provides some context for the credit for dependents that is part of the CTC.
  • Health coverage penalty eliminated. People will no longer be charged a penalty if they did not have health insurance. 
  • Refund delays continue. The PATH Act of 2015 includes a provision that tax refunds that include the EITC or refundable CTC cannot be issued to a taxpayer before February 15 to allow the IRS time to verify income reported. This provision will continue. See CBPP's page on refund delays for more information.
Child and Dependent Care Tax Credit
The Child and Dependent Care Tax Credit (CDCTC) is a federal tax credit designed to help working families pay for the care of qualified individuals including children, adult dependents, or an incapacitated spouse. The goal is to offset care-related expenses in order for the taxpayer to maintain employment. The CDCTC is a percentage of the care-related expenses and varies based on the taxpayer's adjusted gross income. Currently, taxpayers can claim up to $3,000 in dependent care expenses for one child/dependent and $6,000 for two children/dependents. The credit is up to 35% of these expenses, depending on income; the lower the income the higher the percentage of care-related expenses that can be claimed. The current CDCTC benefits are a result of an expansion in the 2001 tax cuts that were extended through December 31, 2012 as part of H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This section provides resources with general information about the CDCTC, including eligibility and how to access the appropriate forms.
Adoption Tax Credit
The Adoption Tax Credit (ATC) is a program for low-income people who have expended qualified out-of-pocket expenses related to the adoption of a child. The credit amount depends on the expenses incurred. Families who have adopted children with special needs can claim the full credit, even if the expenses are less than the credit amount. Adoptions of children with special needs from the foster care system are also fully eligible, even if no adoption expenses were incurred. The ATC was made permanent in the American Taxpayer Relief Act of 2012. This section provides basic information about the ATC and explanations of eligibility and how to apply.
Higher Education Tax Credits
The American Opportunity Tax Credit (AOTC), which expanded and renamed the already-existing Hope and Lifetime Learning credit, can be claimed for tuition and certain fees for higher education. The AOTC, which was to expire at the end of 2012, was extended through December 2017 by the American Taxpayer Relief Act of 2012. This section provides general information about the AOTC and allowable expenses.
Health Coverage Tax Credits
Under the Affordable Care Act (ACA, also sometimes known as Obamacare), millions of Americans qualify for financial assistance to help cover the cost of health insurance. There are also special rules that pertain to victims of domestic violence. Note that the resources and information provided here pertain only to people enrolling in coverage through the federal marketplace. Different rules may apply to those receiving coverage through a state marketplace plan; through Medicaid, Medicare, or CHIP; or through an employer-sponsored plan.