Janise and Kevin Gusman of Kapa‘a received a check for $800 from the federal government this week. They were one of millions of families across the United States who are getting advanced federal child tax credit payments for the current
Janise and Kevin Gusman of Kapa‘a received a check for $800 from the federal government this week.
They were one of millions of families across the United States who are getting advanced federal child tax credit payments for the current tax year.
Other families on Kaua‘i are using the funds to pay for back to school expenses, new clothes for their children and trips to Honolulu, to pay down credit-card debt, go on shopping sprees, get ahead on mortgage payments and for a myriad of other uses.
The Gusmans deposited the funds in the individual retirement accounts of daughters Shanlee, 12, and Kaelin-Jae, 10.
Representatives of the U.S. Internal Revenue Service this week mailed the first of more than 25 million checks provided under a recent tax law change.
According to an IRS spokeswoman, the checks represent an advance of this year’s child tax credit increase, and have gone or will go to most parents who claimed the credit on their 2002 returns.
The Jobs and Growth Tax Relief Reconciliation Act increased the maximum credit amount from $600 to $1,000 per qualifying child, and directed that taxpayers receive the increase for tax-year 2003 this summer, rather than waiting until they file their 2003 returns.
The spokeswoman said the IRS estimates that around 108,000 Hawai‘i families will receive checks.
“As long as we have a good mailing address, taxpayers don’t have to do anything to get their checks,” said IRS Commissioner Mark W. Everson.
Taxpayers should, however, notify the U.S. Postal Service if they’ve moved since filing their last return.
“The IRS will figure the advance amount based on each taxpayer’s 2002 return,” he said.
The initial checks are going to those who filed tax-year 2002 paperwork early enough for IRS officials to process their returns by early July. The mailing date depends on the last two digits of the taxpayer’s Social Security number (based on the first-named person for those filing jointly).
Those whose last two digits are between 00 and 33 had their checks mailed Friday, July 25; those whose numbers end in 34 to 66 were mailed Friday, Aug. 1.
Those whose numbers end in 67 to 99 will have their checks mailed Friday, Aug. 8.
For folks who filed after April 15, including those with extensions, their advance payments, if they qualify, will be sent after IRS workers process their 2002 returns.
Taxpayers who did not claim the child tax credit last year are not eligible for an advance payment, even if they will be able to claim the credit on 2003 returns.
For example, if your only child is born this year, you will not get any advance payment, but you may qualify for the credit when you file your return next year.
Some parents who claimed the child tax credit last year will not receive an advance payment. A child may now be too old to qualify (over 16), or the credit’s tax liability and earned income limitations may result in no increase for that taxpayer.
Or, the amount may be too small. Government workers don’t send checks when the calculated advance payment is less than $10.
The IRS Web site, www.irs.gov, has a new feature to let taxpayers know the amount and mailing date of their advance payment checks.
Click on “Where’s My Advance Child Tax Credit?” for details on the information needed from the 2002 return to check on the status of a payment.
The status check will also tell if a payment may be reduced because of taxes owed or an outstanding federal non-tax debt, or why a taxpayer with a child does not qualify for an advance payment.
The advance child tax credit status application is only for taxpayers who checked a box on line 6(c), column (4) of the return that a dependent was a qualifying child for the child tax credit.
Taxpayers without children who use this feature will get a generic message about the advance payments, but no specific information about their tax accounts.
This Web feature should have information for all taxpayers anticipating a check. It should now have information for all taxpayers included in the initial mailings.
The system is also being updated weekly with data from returns as they are processed.
The IRS is also sending notices that contain the advance payment figure to eligible taxpayers. They should save these notices with other records that they will need to complete their 2003 tax returns.
When preparing those returns, taxpayers will reduce the total child tax credit by the advance payment already received. If the advance amount is more than the credit, which could result from a change in income or in the number of qualifying children, the recipients will not have to repay the difference.
Of over 8.5 million Americans who filed for automatic extensions for filing 2002 tax-year returns, approximately 38,000 were Hawai‘i taxpayers.
The IRS spokeswoman wanted to remind those who filed for extensions that the deadline for filing returns is Friday, Aug. 15.
The spokeswoman said taxpayers need to file returns by that date to avoid a 5-percent-per-month, late-filing penalty, though help may be available for those unable to file by Aug. 15.
Taxpayers with special circumstances, such as a hardship, that prevent them from preparing and filing their tax forms by Aug. 15, may request an additional two-month extension by completing Form 2688.
That will give them until Oct. 15 to file income-tax returns. These taxpayers will be granted an extension of time to file even if they cannot send in payment of outstanding 2002 taxes with the extension request.
Taxpayers granted the additional time to file will not be penalized for late payment of tax if they pay the balance of their 2002 tax when they file the tax return by Oct. 15, provided 90 percent of their total tax was paid by April 15.
Form 2688 is available on the IRS Web site, IRS.gov, and can be filed electronically there, or mailed to the IRS. An IRS representative will advise filers in writing whether or not their requests are granted.
Taxpayers may continue to use the Free File program until Oct. 15. Free File enables qualifying taxpayers to e-file for free.
As of June 30, some 2.78 million taxpayers had used Free File to e-file tax returns. To e-file, taxpayers can use tax preparation software on their own computers, or file electronically through an authorized e-file provider.
Both options offer taxpayers security and accuracy in filing their returns, as well as faster refunds.
Once taxpayers have filed their tax returns, they can use the “Where’s My Refund” feature at the IRS Web site to check the status of their refund checks.
The IRS expects to receive more than 3 million Form 2688s this year.
Staff Writer Paul C. Curtis can be reached at pcurtis@pulitzer.net or 245-3681 (ext. 224).
