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Tax Tip of the Week
For the week of
June 23, 2003

Should you expect a refund check for the child tax credit?


This year's tax legislation raised the child tax credit from $600 to $1,000 per child, effective for 2003. Congress has instructed the IRS to mail out checks this summer for the amount of the 2003 increase. The idea is to pump money into the economy now, rather than waiting until people file for their refunds next year.

Does this mean that if you're a taxpayer with eligible children you'll receive a check for $400 per child? In many cases – yes. But in some cases you'll receive a smaller check or no payment at all.

Why? Because to issue the checks promptly, the IRS is relying on information from your 2002 return to estimate the refund you are due. So if your tax situation has changed since last year, the IRS estimate could be wrong. For example:

If you didn't claim a child tax credit on your 2002 return, you're unlikely to receive a check this summer.


A child born this year won't show on last year's return, so you won't receive a check for that child.


The credit begins to phase out when income reaches a certain limit. If your 2002 income was above that limit, you'll probably receive less than the full amount of the refund, even if your income is lower this year.


If your 2002 income was very low, you may not qualify for a refund.

If the refund amount is wrong, don't be concerned. You'll receive the correct credit eventually, but you'll have to wait until you file your 2003 return to make the adjustment.

The Treasury Department will begin mailing checks for the advance payment of the increased child tax credit on July 25, with most checks mailed by August 8. These mailings will cover eligible taxpayers who filed their 2002 tax returns by April 15. As the IRS processes returns from taxpayers who filed after that date, it will schedule advance payments on a weekly basis.

For the first three weeks, the checks will be sent according to the last two digits of the taxpayer's social security number:

00-33 – mailed July 25
34-66 – mailed August 1
67-99 – mailed August 8

Eligible taxpayers whose returns were not processed in time for these initial mailing dates will have their checks sent out after the IRS processes their returns.



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