Tip of the Week: Check the Child Tax Credit (12/14/98)

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	Check the Child Tax Credit Financial Tip of the Week by Deloitte & Touche OnLine December 14, 1998

The credit could be worth $400 per child if you meet the income test.

Beginning in 1998, a $400 tax credit is available for each dependent child (including stepchildren and eligible foster children) under the age of 17 at the end of the taxable year. For calendar year 1999, the ceiling on the credit goes up to $500. The child credit generally is available only to the extent of a taxpayer’s regular income tax liability. However, for a taxpayer with three or more children, this limitation is increased by the excess of Social Security taxes paid over the sum of other nonrefundable credits and any earned income tax credit allowed to the taxpayer.

Phaseout of the credit begins at modified adjusted gross income levels of $110,000 for joint filers ($55,000 for married taxpayers filing separately) and $75,000 for single filers. Taxpayers will lose $50 of the credit for every $1,000 (or part thereof) of adjusted gross income (AGI) in excess of their threshold. The level at which the credit is phased out completely depends on the number of qualifying children. The child credit and the income threshold amounts are not indexed for inflation.

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