Child tax credit
The child tax credit concept is prevalent in the United States and the UK. In this type of tax, the tax credit for the individual is calculated according to the figure of children that depend on their family. The number of children relying on their families and the earning of the family decide the child tax credit. The United States and the UK have their own policies regarding the child tax credit.
Child Tax Credit in the UK
In the UK if the earning of the family is less than £58,000 and there are dependent children in the family, they claim for the child tax credit. The child tax credit in the UK is treated as non-wastable which means that the family is given the amount despite its net tax liability. If the family has physically challenged children as the dependents then the rate for the child tax credit are greater than in the normal case. In the case of families whose earnings are lower than £50,000, the amount is £545 annually. If the family has to take care of a baby who is less than a year old the amount is £1,090. Families having quite low earnings qualify for £1,765 for each child annually. The amount decreases at a rate of 37% when the income of the family grows to more than £14,155 every year.
Child Tax Credit in the United States
In the United States the child tax credit is given by the statute 26 U.S.C. Sec. 24. and it is considered a good tool for decreasing the tax liability of the citizen. The child tax credit overshoots the tax liability of the family and thus there is an unused part of the child tax credit, which gets converted to additional child tax credit for the families. The refundable amount is calculated according to the earnings of the family in some cases the social security and the medicare taxes paid by the taxpayer is also taken into consideration while awarding the refund. In the United States, only those taxpayers qualify for the benefit of the child tax credit whose child is below the age of 17 by the end of the financial year. The taxpayer must also fulfill the other criteria described in 26 U.S.C. Sec. 152(c) to avail the benefit of the child tax credit.
The child for whom the taxpayer claims the credit can be son, daughter, stepchild or even a foster child. The current per child amount decided for the taxable year in the United States is $1000. There are many other provisions in the child tax credit act which benefit the taxpayer.The benefits of the child tax credit for the taxpayer are like they can have reduction in their federal income tax by $ 1000 for each child who is below the age of 17 during the tax paying period or at the end of it. The taxpayer also avails of a credit depending on the percentage of the total cost of the childcare that one claims. For the families who have low earning there are significant benefits to reap from the child tax credit.
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