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Children may bring us a bright future, but there are expenses related to raising kids. As a consideration to the parents, taxpayers who have children and other dependents, can have several tax benefits. This is part of helping them with the related expenses of child-rearing. The tax reform bill gives several changes which can either increase or decrease a taxpayer’s bill, depending on the following specific situations.

Increase in Child Tax Credit
The Tax Cuts and Jobs Act provide some significant relief to parents. Each qualifying child now receives a tax credit of up to $2,000. This is an increase for all eligible children or those who are under the age of 17. As much as $1,400 of that amount is refundable for lower-income parents.

This amount is a large tax benefit although several middle-class parents have complained that this benefit was withdrawn from them. The reform bill offers a remedy by increasing the income level. Those who have an income level of $400,000 or $200,000 among married filing joint and single filers respectively will experience this phase-out. The advantage is more parents who have children or dependents can avail of this tax benefit. More so, the amount of their benefit is higher.

Suspension of Personal Exemption
Most taxpayers enjoy the personal exemption privilege. Unfortunately, the tax reform bill eliminates the personal exemption. The suspension starts in the tax year 2018. The taxpayers cannot anymore claim a deduction for the personal exemption for their dependents, their spouses, or even themselves.

Need of the Social Security Number
Under the tax reform bill, a child for whom the child tax credit is claimed should have a Social Security Number. Parents should make it sure that the Social Security number has already been issued before the tax return due date and possible extensions. It is important to take note that the ITIN or Individual Taxpayer Identification Number is different from a Social Security Number. Having an ITIN does not make a child eligible for the tax credit benefit.

The words “Not valid for employment” is also not needed on the Social Security card. Most children who have become permanent residents or have become U.S. citizens usually have their card printed with these words. The parents should contact the Social Security Administration and get a new card without those words for their child.

If a child does not have the Social Security numbers and cannot avail of the Child Tax Credit, he can still avail of another tax benefit, the new Credit for Other Dependents. Here, the ITIN is the main need which the child should already have before the tax return due date, including any extension dates.

Expat taxpayers and their spouses and dependents, and use the ITINs instead of the Social Security Numbers should visit irs.gov/ITIN. On this site, the requirements for renewing the ITIN are posted. Before filing their taxes, parents should review the conditions.

Consideration for January 1 Birthdays
The tax reform has a new rule for children born on January 1. They will be treated as born on the previous year’s December 31 date. If a child born on January 1, 2000, turned 18 in 2018, under the tax laws, the child is already 18 on December 31. Hence, he is no longer eligible for the child tax credit.

Changes for ABLE Accounts and 529 Plans
ABLE account or Achieving a Better Life Experience will have several changes starting on the 2018 tax year. There will be an increase in the limits of the ABLE account contributions. Some 529 tuition plans will also experience transfer to ABLE accounts. The IRS provides more information about this rollover.

Those who have ABLE contributions can claim a Saver’s Credit starting 2018 as long as the taxpayer receives benefit from the ABLE account. The IRS website has several other information on the Saver’s Credit.

Other provisions like the Tax Cuts and the Jobs Act will enable people with disabilities to contribute more to the ABLE account. Being able to do so would help them, the account owners, to claim the Saver’s Credit. Similarly, persons with disabilities can also rollover to their ABLE accounts for their current 529 plans.

Up to $10,000 distributions from 529 plans can be used yearly for the beneficiary’s tuition in a religious K-12 school or any private schools. The 529 plan distributions are also no longer limited to higher education.

Better Treatment of a Child’s Unearned Income
A child’s unearned income will no longer be part of the parent’s taxable income beginning the tax year 2018. This is for the incremental tax liability which belongs to the parent’s marginal rate. A parent who has separate investments for each child will gain favor from these changes. A parent who has all investments under one child’s name will gain more benefits.

From now on, there will be tax brackets for the calculations for a child’s “kiddie tax.” This is the tax on each child’s net unearned income. These tax brackets are those applicable to trusts and estates. The tax bracket can also exceed the parents’ tax rate. An example woulf be 37% on interest income for $12,500 or 20% for $12,700 for long-term capital gains and qualified dividends.

Addition of Dependent Credits
The addition of Credit for Other Dependents is another positive change brought by the tax reform. Each eligible dependent can gain up to $500 tax credit. Older relatives not claimed under the regular child tax credit are also qualified. Like the child tax credit, this benefit phases out at $200,000 and $400,000 when filing jointly. Before, this credit was not available for children age 17 and older college students who do not have their ITINs, including other relatives living under the same roof. Such addition provides more relief to parent taxpayers.