Your Tax Question - 065

Dear John, Do you know why the advanced earned income credit was appealed? Thanks, Janice
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Hi Janice,

No, I am sorry, I do not know why the AEITC was repealed – just that it was. Here’s what it says on the IRS’EITC webpage from 1/4/2011.

The Education Jobs and Medicaid Assistance Act of 2010 signed into law August 10, 2010 repealed the Advance EITC. It will not be available to workers after December 31, 2010.

Individuals who received Advance EITC during any tax year must file a tax return to report the payments even if they owe no tax or will not get a refund.

Advance EITC, also known as AEITC, allowed certain workers to receive EITC in installments throughout the year, instead of a lump sum during the following filing season. To qualify for Advance EITC, an individual must have had at least one qualifying child. The amount of Advance EITC was limited to 60 percent of the maximum credit payable for a worker with one qualifying child.

I am sorry if you were one of the people who were depending on that advance for your livelihood. I know that it is a hardship on many.

Regards,
John

Your Tax Question - 061

Dear John, So is it true that this is the final year for the $1000 per child tax deduction? I was really like this little reduction from the taxes that I pay each year. Please let me know. Sincerely, Angela
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Hi Angela,

The child tax credit was due to expire after 2010 but it has been extended for two years. The child tax credit allows parents to reduce their federal tax bill by up to $1,000 for each qualifying child under age 17.

Also, the expansion of the Earned Income Tax Credit included in the economic stimulus package will continue for two more years as well. But I will leave that for another post.

Thanks,

John

PS. As of now, there are only 76 more days until tax day. If you could use a tax preparer I happen to know this really cool guy that does this sort of thing.