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Frank DiPaola,
EA
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Tax Accountant |
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Increase and
Expansion of the Child Tax Credit
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This
law has been revised on October 4, 2004, with the "Working
Families Tax Relief Act of 2004"
Click here for updated information. |
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The new tax
law increases the child tax credit to $1,000 gradually over the next 10
years, beginning in tax year 2001. |
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Increase of the Child Tax Credit |
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Tax Year(s) |
Amount Per Child Under
Age 17 |
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2001 - 2004 |
$600 |
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2005 - 2008 |
$700 |
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2009 |
$800 |
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2010 and later |
$1,000 |
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The tax act
makes the child tax credit refundable to the extent of 10% of the
taxpayer's earned income in excess of $10,000 for tax years 2001 - 2004.
The percentage is increased to 15% for tax years 2005 and later. The
$10,000 amount will be indexed for inflation beginning in year 2002.
The tax act
also provides that the refundable child tax credit will NO longer be
reduced by the amount of the alternative minimum tax (AMT). In addition,
the tax act allows the child tax credit to the extent of the full amount
of the individual’s regular income tax and alternative minimum tax. The
provision relating to allowing the child tax credit against alternative
minimum tax (AMT) is effective for tax years beginning in 2002. |
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Click here to return to "Economic Growth & Tax Relief Reconciliation
Act of 2001" |
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