child

Article Dean Dorton

There were some changes made to the child tax credit rules in the new tax bill. The amount of the credit was increased, the adjusted gross income phase-outs were increased, a new non-child dependent tax credit was added, and limits were added to the refundable portion of the tax credit. The changes are summarized in the below table.

Old Law New Law
Qualifying Child Tax Credit $1,000 per child UNDER age 17 $2,000 per child UNDER age 17
Qualifying Dependent Tax Credit N/A A $500 nonrefundable tax credit is added for qualifying dependents other than qualifying children
AGI Phase-Outs The child tax credit is reduced $50 for each $1,000 of modified gross income (AGI) over $75,000 for single individuals or heads of households, $110,000 for married individuals filing jointly, and $55,000 for married individuals filing separately. The child tax credit is reduced by $50 for each $1,000 of modified gross income (AGI) in excess of $400,000 for married individuals filing jointly, and $200,000 for all other taxpayers. The phase-outs are not indexed for inflation.
Refundable Credit If the child tax credit exceeds the taxpayer’s tax liability, the taxpayer is eligible for a refundable credit (also known as the “additional child tax credit”) equal to 15% of earned income in excess of $3,000 (the “earned income” formula).

The maximum refundable tax credit cannot exceed $1,000.

 Same as the old law, except the additional child tax credit is equal to 15% of earned income in excess of $2,500 instead of $3,000.

The maximum refundable tax credit cannot exceed $1,400. This amount will be indexed for inflation in increments of $100.
Alternative Formula Families with three or more children may determine the additional tax credit using the alternative formula if it results in a larger credit under the earned income formula. Under this formula, the additional child tax credit equals the amount by which the taxpayer’s Social Security taxes exceeds the taxpayer’s earned income credit. Same as old law
Social Security Numbers No credit will be allowed unless the taxpayer includes the name and Social Security number of the qualifying child on the taxpayer’s tax return. The Social Security number must be issued on or before the filing due date (including extensions) of the taxpayer’s return. There is still a Social Security number requirement for the qualifying child tax credit, but there is not a Social Security number requirement for the $500 non-child dependent tax credit. If a qualifying child does not have a Social Security number, they are still eligible for the $500 non-child dependent credit.

Article Dean Dorton

Attention all coders, especially in the dermatology, cardiology, and OBGYN fields. Please see the following 2017 ICD-10-CM Coding Guideline and Coding Changes:

1. Guideline I.B.19 was added after the initial publication of the 2017 ICD-10-CM:Code assignment and Clinical Criteria

The assignment of a diagnosis code is based on the provider’s diagnostic statement that the condition exists. The provider’s statement that the patient has a particular condition is sufficient. Code assignment is not based on clinical criteria used by the provider to establish the diagnosis.

This affects both ICD-10-CM coding and CPT assignment. A physician must document the diagnosis for lesion excisions as either benign or malignant, coders can no longer use the pathology report to determine the correct ICD-10-CM code or the CPT code.

This also means that the attending physician must document the type of infection in order for coders to code infections accurately.

2. ICD-10-CM guideline I.C.9: Diseases of the Circulatory System (I00-I99) was added for 2017:

A significant change has been made when coding for hypertension regarding “with” documentation, additional instruction to chronic kidney disease documentation and coding for hypertensive crisis.

Because the word “with” is used in the Alphabetical Index, a causal relationship can be assumed without physician documentation between hypertension and kidney involvement.

3. Two new additions for Pregnancy, Childbirth, and the Puerperium:

  • Zika virus disease code has been added to the A92 code section in order to track the disease: A92.5
  • Code Section O11 has been expanded to add new codes for pre-existing hypertension:
    • O11.4 Pre-existing hypertension with pre-eclampsia, complicating childbirth
    • O11.5 Pre-existing hypertension with pre-eclampsia, complicating the puerperium

If you have any questions or would like to learn more, contact your Dean Dorton advisor or Adam Shewmaker (ashewmaker@ddafhealthcare.com) or Brandy Montgomery (bmontgomery@ddafhealthcare.com).

Article Dean Dorton

Section 529 plans provide a tax-advantaged way to help pay for college expenses. Here are just a few of the benefits:

  • Although contributions aren’t deductible for federal purposes, plan assets can grow tax-deferred.
  • Some states offer tax incentives for contributing in the form of deductions or credits
  • The plans usually offer high contribution limits, and there are no income limits for contributing.

Prepaid tuition plans

With this type of 529 plan, if your contract is for four years of tuition, tuition is guaranteed regardless of its cost at the time the beneficiary actually attends the school. This can provide substantial savings if you invest when the child is still very young.

One downside is that there’s uncertainty in how benefits will be applied if the beneficiary attends a different school. Another is that the plan doesn’t cover costs other than tuition, such as room and board.

Savings plan

This type of 529 plan can be used to pay a student’s expenses at most postsecondary educational institutions. Distributions used to pay qualified expenses (such as tuition, mandatory fees, books, supplies, computer equipment, software, Internet service and, generally, room and board) are income-tax-free for federal purposes and typically for state purposes as well, thus making the tax deferral a permanent savings.

The biggest downside may be that you don’t have direct control over investment decisions; you’re limited to the options the plan offers. Additionally, for funds already in the plan, you can make changes to your investment options only twice during the year or when you change beneficiaries.

But each time you make a new contribution to a 529 savings plan, you can select a different option for that contribution, regardless of how many times you contribute throughout the year. And every 12 months you can make a tax-free rollover to a different 529 plan for the same child.

As you can see, each 529 plan type has its pluses and minuses. Whether a prepaid tuition plan or a savings plan is better depends on your situation and goals. If you’d like help choosing, please contact us.