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This guide looks at the latest news in regard to Child Tax Credits and Universal Credit.
Last week, the Child Tax Credit Improvement Act was approved by the United States House of Representatives. The house cleared this bill by a vote of 237-173.
As per the present law, parents can claim a Child Tax Credit of up to $1,000 per child. The credit is available to every child, under the age of 17, of any federal taxpayer. In 2012, this credit was claimed by around 37 million taxpayers, who saved roughly $57 billion in taxes. There's also a refundable portion of this credit, which is available to low-income families that do not have any federal tax liabilities.
In its present form, unmarried individual taxpayers with income of up to $75,000 can claim this credit. However, for married couples, the credit is only available for couples with joint earnings of under $110,000. If filing individually, each married individual can claim this credit only if they are earning less than $55,000. This way, there's a so-called married penalty, which does not favor married couples or individuals.
However, this act may not become law as democrats are opposing it in the Senate and the White House. They claim this act will deprive lots of children, whose parents are immigrants, from this credit and push them into poverty. And they have raised questions on the bill being silent on the refundable portion of the credit, which is set to expire in 2017.
The cost of this proposal, if approved, will be $115 billion in foregone earnings to the US government.