Child tax credit

The child tax credit is a significant benefit for low income workers. A taxpayer is given a tax credit of $2,000 for each child. A credit is not a deduction. A credit is taken off after you figure your taxes. If you owe $4,000 in tax and you have two children you owe nothing. There is a distinction between refundable and non- refundable credits. Non-refundable means you must owe at least $4,000 in taxes in order to deduct the $4,000 credit. What happens to those who owe no income tax? They are eligible for a $1,400 refundable credit for each child. If a family of four earns $30,000 they will owe no income tax and they will receive a government check for $2,800 under the child tax credit and another $4,300 from the earned income credit. Since there is no social security deducted for these two benefits their net income is $30,000 less social security and Medicare yields $27,705 plus $2,800 plus $4,300 for total take home pay of $34,805. This equates to $17.40 per hour.