Advance child tax credits trip up some early filers

Tax Tips Second in a series.

Tax tips

Your Money

February 08, 2004|By Lorene Yue

As tax returns roll into the Internal Revenue Service, one glaring error is cropping up among filers with dependents.

Many parents forgot they received a child tax-credit advance last year and are trying to claim the full $1,000 per child on their 2003 returns. No can do.

Here's what is causing the problem: A tax cut enacted in May gave more than 25 million households an early cut of the child tax credit, which was increased to $1,000 from $600 per child in 2002. The advance hit mailboxes in the summer, up to $400 per child claimed on your 2002 tax return. But who can remember that far back?

"You may not remember getting a check, or what it was for," said Sue Hales, who works in the IRS' northern Illinois office. "From July to September, people weren't thinking about their taxes."

When you're doing your taxes now, you have to deduct the exact amount of that advance. Software programs and worksheets will help with the calculations, but you still need to track down your advance.

If you can't find that amount, head over to www.irs.gov and click on the advance child credit heading. Or call 800-829-1040.

Guessing at the amount can delay your refund, so get the exact figure.

You're exempt if your child turned 18 last year, or if your income disqualifies you. The credit phases out for incomes above $110,000 if married and filing a joint return; $55,000 if married and filing separately; or $75,000 for all other filers.

Next week: Overlooked deductions.

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