Treasury Releases Child Tax Rebate Checks Timetable: Those child tax credit rebate checks will start fanning out across the U.S. starting on July 25, the Treasury Department announced.
More than 25 million taxpayers will be receiving checks of $400 per child for the advance payment of the extended child tax credit passed into law by the Jobs and Growth Tax Relief Reconciliation Act of 2003.
The checks will go out in order of the last two digits of the recipient’s Social Security number.
According to CCH Tax News, the Internal Revenue Service is identifying taxpayers who are eligible for the advance payment by running a program to search more than 130 million 2002 tax returns filed earlier this year.
On June 5, 2003, the Senate passed the Relief for Working Families Tax Bill of 2003, which would extend the child tax credit to seven million more taxpayers - low-income families who don’t make enough to pay income taxes. President George W. Bush said that he supports the measure and will sign it if the House and Senate agree on a bill to send him.
If so, the Treasury has indicated that it would not be able to issue a second round of checks until mid-September 2003.
Senate Passes More Family Tax Relief: Sen. Chuck Grassley, R-Iowa, chairman of the Committee on Finance, won Senate passage of a compromise version of his legislation to give Americans more family tax relief.
The legislation, passed by the Senate 94 to 2, contains the following provisions:
● Acceleration of the refundability of the child tax credit;
● A uniform definition of a child, a major tax simplification measure to make filing easier for just about anyone with a child and to increase child-related benefits for hundreds of thousands more taxpayers; and,
● Marriage-penalty relief under the child credit.
Under the new legislation, the tax code would have a uniform definition of a qualifying child for the dependency exemption, the child credit, the earned income credit, the dependent care credit and head of household filing status. This simplified, uniform definition would make hundreds of thousands more taxpayers eligible for child-related tax benefits.
To make the bill more palatable to the cost-conscious House, its entire cost is offset by the extension of existing Customs Service user fees.
Experts Say Sunset Provisions Should Give Investors Pause: The new tax law seems to answer many investors’ prayers, but before rushing out to completely overhaul your portfolio, you should take into account some of the sunset provisions built into the law - and how they might complicate long-term planning, experts say.
Under the Jobs and Growth Tax Relief Reconciliation Act of 2003, the highest capital gains tax rate, as well as the tax on dividends, was shaved to 15 percent, but the percent rate is scheduled to return to its higher, 20 percent level as soon as the clock strikes midnight on Dec. 31, 2008. Dividends will also return to their higher levels.
Congress may make the provisions permanent because they’re bound to be popular with taxpayers. “For the most part, you’ll have to be making some sort of bet as to the political will of Congress,” said Bob Trinz, editor of RIA’s Federal Taxes Weekly Alert. “I would imagine that whether or not these provisions are sunsetted would largely depend on who’s living in the White House.”
California CPA and financial planner Irv Rothenberg said that the sunset provisions make it difficult to focus on long-range planning, but it does give him some ideas for his clients.
“We will be looking at different strategies in accounts that are subject to taxation. As a general rule, we would look to put assets that had high taxation into deferred accounts. Now the question is, ‘Well, is that still appropriate?’”
CCH principal tax analyst Mark Luscombe said that if Republicans hold onto the White House and Congress in 2004 and 2008, there’s a good chance that the tax benefits will stay.
“I think if the Republicans had their way, they would extend the provisions, by and large, regardless of the economic positions and the deficit posture,” said Luscombe. A Democratic Congress, however, would most likely get rid of any benefits that appear to mostly benefit the rich.
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