Child tax credit

It seems from the referenced article that congress agrees with you, AU. It now seems that the increased credit will be used to lower total tax liability, reducing taxes owed or increasing the refund, as the case may be.

The alternative seems to have been some sort of negative income tax, essentially paying compensation for a lack of income. The Earned Income Tax Credit has similarities, but the payment is actually dependent on earned income, though I cannot provide details.

I really oppose negative tax schemes. A refund is based on taxes paid; these ideas are welfare, plain and simple, and ought not be confused with the tax collection process.

As someone who benefitted from the Child Tax Credit, when my husband and I were seperated, all I can say is when you are of a low income and have children (sources of great love and EXPENSE), the credit is a decent way to keep these children from life in poverty.

The number of mouths to feed should figure into the tax scheme in a more pronounced way that the regular deduction, and this is, IM biased O, a fair way to do it.

It basically lowers taxable income $1000. per child.

I no longer have to use it, but I know the real help it can be for low income people.

Sofia

That is what I would have expected when I read that they increased the deduction for each child [up to two] from $600 to $1000. However the debate is not about a deduction but giving $400 dollars to people who paid no tax at all. If the Idea is to help the poor fine but do not call it a tax reduction. You cannot reduce $0.

I agree with au. I think that a child care stipend is money well spent on the part of the government that a mother can go to work to support her family, but it should not be called a tax credit, if no taxes have been paid.

By the way, credits are not the same as deductions. A $1,000.00 deduction lowers taxable income by $1,000.00. A $1,000.00 credit lowers the actual tax liability by $1,000.00. Credits are better, regardless of tax bracket.

My apologies. Should have read more carefully.

This is the way I understand it. The Gov't raise the Child tax credit to $1000, retroactive to Jan. 1. If you submitted your 1040 and everything was hunky dory, then you paid an extra $400 in taxes that you should have deducted as a tax credit. Therefore the gov't will be refunding the amount that you over paid. That means that you would have had to actually pay the original $400 in the first place (from your wages over the course of the year). That's where the controversy comes in. Who paid and who didn't?

BTW, thanks for the invite.

McGentrix
Whether you paid or did not pay they will now issue you a check for $400. That is providing the house passes the pending legislation. Is this tax relief or a government handout?

Seems like a gov't handout.

Hmmm.. I'd have to go back and play with this in a tax program to see how it would work out but I don't think those in the target income group would realize the full $400. There may be a few of them that will have their taxes due reduced to $0 but for those that are already in that situation the credit won't be a direct $400 back to them. (Once your taxes hit $0 it will probably increase the amount they'd get under EIC but I don't think it would be the full $400).

I'll play with that tonight in TurboTax and see how it works out...

Fishin
That is what I thought when first I read about the legislation. However, from all indications I was wrong. They will get a $400 check for each of 2 children under 16 years of age. Refund for some handout for others.

I just got back from a week away to find our check from Uncle Dubya waiting for us. I was puzzled by this, because we are not rich, but I had heard that Bush's tax cuts were only supposed to help rich people. Perhaps I got the check in error? :wink:

scrat
Should we stand up and cheer?

Just having a little fun. (You remember fun, don't you? It's that thing you have when you stop trying to pick a fight in every discussion you find me in.) Seriously. Lighten up. I'm sure you're a decent guy and the fact that you and I disagree on a lot of things shouldn't mean we can't treat each other with courtesy, respect, and a bit of humor whenever possible.

Not having any eligible offspring (though my offspring do have their own eligible offspring), I am neither entitled to nor deserving of The Credit ... which is fine. Had I eligible offspring, yet had paid no tax, I would expect to be just as ineligible for a tax credit predicated on an increase in the per-dependent tax deduction . To my mind, there's a world of difference between "Gimme" and "Gimme it back". I see perfect justification in tax relief being accorded to those who pay taxes, and I would see any basis other than tax relief in direct proportion to tax paid as unconscionably injust. The notion of applying "Tax Relief" to non-taxpayers is ludicrous, and comprises not only a core logical flaw but an unconstitutional injustice. I freely admit to receiving benefit from revisions in Capital Gains and Dividend Taxation, and in fact have adjusted my investment activity accordingly. I don't whine about paying for schools in which I have no children, and I see no reason for anyone not subject to a tax to realize any benefit or gain from a revision in that tax. As the economy improves ... which, as real GDP is increasing, it certainly is doing, certainly some of the left-out whiners will, by virtue of incurring a tax burden, be entitled to, and receive, tax relief. Anything else is nothing other than redistribution of wealth ... not exactly a principle on which this country and its Constitution are based.