Family situations can be unique and ever changing. Because of this, you need to be able to comprehend the intricacies of the child tax credit (CTC), the additional child tax credit (ACTC) and the other dependent credit (ODC) to accurately assess your clients’ tax situations.

This understanding will ensure your clients receive the full benefits they’re entitled to, optimizing their tax returns and minimizing possible financial burdens.

Below, you’ll find a few of the top questions from a recent webinar on the topic and their accompanying answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.   

Q: Which parent signs Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent – the parent who cannot claim the child tax credit (CTC) or the one who can?

A: The custodial parent files Form 8332 to release the dependency exemption to the noncustodial parent, allowing the noncustodial parent to claim the CTC for each qualifying child who meets certain conditions. Thus, the parent who cannot claim the CTC signs Form 8332, not the one who can claim it.

Q: Isn’t the CTC only for children under age 17 and disabled children?

A: To qualify for the CTC, each qualifying child must be under age 17, even if the child is totally and permanently disabled. While a disabled child of any age can be claimed as a dependent under the qualifying child rules, they must be under age 17 to qualify for the CTC.

Q: Is there a maximum number of children a taxpayer can claim for the CTC?

A: No, there is no maximum. Taxpayers can claim the CTC for each dependent who is a qualifying child under age 17 and has the required Social Security number.

Q: Now that the identity protection personal identification number (IP PIN) allows a duplicate dependent return to be e-filed, how does this affect certain credits like the CTC?

A: Beginning with the 2025 filing season, taxpayers with an IP PIN can e-file a duplicate dependent return. This enables them to claim the child as a dependent on the e-filed return, along with applicable credits like the CTC. However, this does not guarantee they are entitled to claim the child. The IRS will reconcile who is eligible to claim the child and the applicable credits afterward.

To learn more about calculating child tax credits, you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial.

Many states do not conform to federal bonus depreciation rules, which can lead tax pros to overlook this option. However, a thorough understanding of the requirements and distinctions between bonus depreciation and Section 179 can help you determine the most advantageous strategy for your clients.

Below, you’ll find a few of the top questions from a recent webinar on the topic and their accompanying answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.   

Q: Section 179 cannot create a loss, but bonus depreciation can create a loss. Is this correct?

A: Yes, bonus depreciation can create a loss as there is not a dollar cap, income limitation, or investment limit like there is for the Section 179 deduction.

Q: Does bonus depreciation need to be recaptured later?

A: Yes, when the property for which bonus depreciation was claimed is sold, that depreciation is recaptured and taxed as regular income. Additional first-year bonus depreciation is not treated as a straight-line method [Reg. §1.168(k)-1(f)(3)].

Q: Does qualified improvement property qualify for Section 179?

A: Yes, if the qualified improvement property is as described in §168(e)(6). See IRS Publication 946.

Q: Can a disallowed Section 179 deduction be carried forward?

A: Any Section 179 deduction disallowed due to income limitation can be carried forward for an indefinite number of years.

To learn more about evaluating bonus depreciation vs. Section 179 deductions, you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial.

Question: Jessica will purchase a new electric vehicle (EV) in 2025. She knows the federal clean vehicle tax credit but prefers to apply it directly at the dealership rather than waiting to claim it on her tax return. Can she transfer the credit to the dealer at the point of sale?

Answer: Yes. Under the Inflation Reduction Act of 2022, effective for vehicles placed in service in 2024 and beyond, eligible taxpayers can transfer the clean vehicle credit to an eligible dealer registered with the IRS [§30D(g)]. This provision allows the credit to function as an immediate price reduction rather than waiting to claim it when Jessica files her tax return.

To qualify, the EV must meet the final assembly, battery component and critical mineral requirements outlined in §30D(d). Additionally, Jessica’s modified adjusted gross income (MAGI) for the current or preceding tax year must not exceed the applicable limit – $300,000 for married filing jointly, $225,000 for head of household, or $150,000 for single filers – or she must repay the amount received for transferring the credit when filing her tax return [§30D(f)(10)].

Any improper use of the credit by ineligible taxpayers may result in a recapture of the credit upon filing.