2013 Child Tax Credit Drops to $500. Better Get that December C-Section or Inducement Scheduled Now!

A close friend of mine is expecting the birth of their first child towards the end of this year. His wife has an estimated due date of Dec. 29. My advice to them? If you were planning on scheduling a December c-section or inducement, better schedule it now before all of the appointment slots get booked!

Why?

The difference between a December 31, 2012 birth and a January 1, 2013 birth could cost them $1,000 of additional tax liability. And since the child tax credit is scheduled to drop from $1,000 to $500 in 2013, they may never see a $1,000 credit again.





Here’s a bit of history on why this is happening.

The Child Tax Credit Drops in 2013

As part of the Obama tax cut deal reached with Republicans, the previous Bush tax cuts that raised the Child Tax Credit to $1,000 from $500 were extended through 2011 and 2012.

Without further extension (an agreement seems unlikely at this point, but you never know), the child tax credit drops back down to $500 in 2013.

  
What is the Child Tax Credit?

 For those looking for a little more background, the Child Tax Credit allows you to claim a maximum $1,000 per qualified child (as noted, that drops in 2013 to $500).

This is a non-refundable income tax credit, meaning that if your credit exceeds your income tax liability, then you won’t get a check for the difference.

Still, non-refundable credits are great, because they represent a subtraction from your actual tax liability, which is much more valuable than a deduction (which is only a subtraction from your taxable income).

However, if your income is below a certain threshold, you can also claim the ‘Additional Child Tax Credit‘, which allows you to get a refund for the difference if your credit exceeds your tax liability.

Can you Claim the Child Tax Credit in the Year the Child was Born?

What if the child was born in the second half of the year, or even the last day? Can you still claim the child tax credit for that year?

In short, yes. Publication 972 lists this as one of the exceptions in which you can claim the credit.

Child Tax Credit Income Levels & Qualifying Criteria

The Child Tax Credit is limited if your MAGI is above a certain amount. The amount at which this phase-out begins varies depending on your filing status. For married taxpayers filing a joint return, the credit phase-out begins at $110,000. For married taxpayers filing a separate return, it’s at $55,000. For all other taxpayers, the phase-out begins at $75,000.

According to the IRS Child Tax Credit FAQ, a qualifying child for this credit is someone who must also meet the qualifying criteria of six tests: age, relationship, support, dependent, citizenship, and residence. So you’ll want to double-check that your child qualifies before filing for the credit.

There are also tax credits for child care you may want to look in to.

Deep Thoughts by G.E. Handy

So, let me first state that I would not recommend anybody schedule an early inducement or c-section for a January estimated due date just to be able to shave off $1,000 in tax liability. But for those due in mid or late December, holding off until January could cost you $1,000! And that’s why I’d expect a near record number of births the last week of this year, moreso than previous years.

And to that point, it got me thinking some crazy thoughts…

You would have to assume those that are aware of this special tax scenario are on top of their finances. And they are probably fairly intelligent, or well educated on top of that. Which makes me wonder:

    

Do babies born in the last week of December have a higher average IQ than those born in other weeks of the year?

What is the average income of the households they are born into vs. other weeks of the year?

Ponder those deep thoughts for a moment…

source: 20somethingfinance.com

Customs to revive amnesty for tax-deficient imported vehicle buyers

MANILA - After failing to hit monthly revenue targets since he assumed the post, Customs Commissioner Rufino Biazon will revive an amnesty program benefiting vehicle importers who failed to pay correct duties on their purchases.

"We are presently coordinating with the Land Transportation Office for the forging of MOA that will enable us to pursue with the VDP within the year," Biazon said, referring to the Voluntary Disclosure Program.

"The VDP will strictly pertain to private individuals and does not include dealers or manufacturers," he said.

The Customs chief said the amnesty will benefit only private vehicle owners since they may not be liable for any erroneous entries on import documents submitted to the bureau.

"Dealers or those involved in selling vehicles should know better whether the importation entries they respectively filled out were erroneous or not since they are engaged in the business of buying and selling vehicles. Hence, unlike private vehicle owners, dealers and manufacturers cannot invoke good faith,” Biazon said.

"It took a while before we could finally push through with the program since we still have to secure the necessary clearances from the Department of Finance," he said. The Customs chief didn't say how much the program would contribute to revenues.

The Aquino administration was supposed to have revived the program last year.

The Arroyo administration introduced the VDP under then Customs chief Napoleon Morales pursuant to Customs Administrative Order 5-2007, which was aimed at rewarding honest traders and penalizing unscrupulous ones.

The order provides that if an importer realizes the mistake or error before their import papers are audited by Customs, they may avail of the program to correct these mistakes and settle the obligations.

Should Customs discover these irregularities during regular post-entry audit, the erring importer or vehicles owner will have to pay the penalty, ranging from 50 to 800 percent of the corresponding taxes and duties that were due.

Biazon said the program does not exempt an importer from criminal prosecution should they be discovered to have committed fraud in reducing their tax liability.

The Post Entry Audit Group is tasked to review shipment records to detect any discrepancies and irregularities in the importation.

The decision to revive the amnesty program comes amid Customs' failure to hit monthly revenue targets. Last month, the bureau was missed its P28.34 billion collection goal by P3.59 billion.

This brought the first five-month revenue tally to P119.71 billion, or 13 percent short of the agency's P137.71 billion collection target for the period. It is tasked to raise P346.41 billion for the whole year to help keep the government's budget deficit below the P279 billion ceiling.

source: interaksyon.com