The Cincinnati Enquirer

One of the biggest provisions of the tax law signed by President Bush this week is tax relief for parents of children born after 1986. Some answers to questions about the child tax credit:

Question: How do I find out if I'm eligible for a child tax credit check?

Answer: Generally, you're eligible if you claimed the child tax credit on your 2002 tax return and your qualifying child was born after 1986. The Internal Revenue Service will send you a notice of your advance payment amount a few days before your check is mailed.

Q: Who won't be eligible?

A: Because of the formula for calculating the tax credit, most families with incomes between $10,500 and $26,625 will not benefit from the increased credit. The Center on Budget and Policy Priorities, a liberal research group, says those families include 11.9 million children, or one of every six children under the age of 17.

Q: What do I need to do to collect, if I qualify?

A. Nothing. The IRS will use your 2002 tax data to automatically figure whether you're due an advance payment check and if so, how much it will be. If you're getting an check, the IRS will notify you shortly before it is mailed. You won't need to call or fill out any forms or applications

Q: When will I receive my check?

A: The Treasury will mail most of the advance payment checks July 25, Aug. 1 and Aug. 8 - more than 8 million checks each week. The mailings will be scheduled according to the last two digits of the Social Security number that appears first on the 2002 tax form.

Q: Why are the checks being mailed?

A: People often change bank accounts. Although people also move, a mailed check can and will be forwarded to a new address. However, a direct deposit cannot be forwarded if a bank account has been closed.

Q: I have moved since filing my 2002 tax return. How will my check reach me?

A: File a change of address notice with the U.S. Postal Service to ensure that your advance payment check may be forwarded to your new address. Without your current address, the check could be returned to the IRS as undeliverable.

Q: I have not filed my 2002 tax return. Can I still qualify for an advance payment?

A: If you filed for an extension, you have until Aug. 15 to file your 2002 tax return. (Under some circumstances, you may seek another extension until Oct. 15.) If you claim a child tax credit on your 2002 return, follow the 2002 tax law in figuring the amount. Do not change your return or your tax payment in anticipation of an advance payment. If you are eligible for the advance payment, the IRS will mail your check four to six weeks after it receives your 2002 tax return.

Q: My spouse and I have divorced and the advance payment check is made out to both of us. Can I cash it?

A: If the check is made payable to two parties, then both parties must endorse the check on the back. Even if the two parties are now divorced, both must sign the check.

Q: What if I receive an advance payment that's larger than the Child Tax Credit I am entitled to claim on my 2003 return?

A: When figuring your 2003 child tax credit, you will subtract your advance payment from the amount you would otherwise claim. If your advance payment was more than this amount, you will not have to repay the difference.

Q: Will this advance payment raise my taxes for 2003?

A: No - it's part of the tax cut the new law gives you for 2003. Keep the notice that the IRS sends you for your tax records. You will need your advance payment amount to figure the child tax credit on your 2003 return.

Q: If I receive the advance child tax credit payment, will I get a smaller refund than last year?

A: Assuming your income and number of qualifying children remain the same, your 2003 refund shouldn't be smaller than your 2002 refund because of your advance payment. The law simply gives you this increase now, rather than having you wait until next year for a bigger refund.

Q: I'm eligible for an advance child tax credit payment, but I still owe federal income tax from last year.Will my advance payment be reduced because of this?

A: Like any tax refund, the advance payment may be applied against a taxpayer's past-due federal or state income tax, or nontax federal debt. If the advance payment amount is more than the balance owed, the taxpayer will get a check for the difference. Taxpayers subject to such offsets will receive a letter explaining how the advance payment was applied.

Sources: Internal Revenue Service, The New York Times and Enquirer research