December 17, 1997
Workers Can Boost Paychecks
with Child Tax Credit
WASHINGTON - Employees can add the benefits of the new child tax credit to
their paychecks by filing a new Form W-4 with their employers. This credit is one of
many tax law provisions taking effect in 1998.
The child tax credit will be $400 for each eligible dependent under the age of 17
at the end of 1998. However, the credit begins to phase out for taxpayers with incomes
of more than $75,000 ($110,000 for joint returns; $55,000 for married persons filing
separately). The credit is reduced by $50 for each $1,000 -- or fraction thereof -- of
income above these amounts. The credit normally cannot be more than one’s tax
liability, with exceptions for some taxpayers who have more than two children or who
claim the earned income tax credit.
The Internal Revenue Service has included the child tax credit in the worksheet
for the 1998 Form W-4, “Employee’s Withholding Allowance Certificate.” Employers
use this form to figure the federal income tax to be withheld. The number of allowances
claimed for the child tax credit will depend upon the taxpayer’s income and the number
of eligible children.
The 1998 Form W-4 is available for downloading from the IRS Website at
www.irs.ustreas.gov. Printed copies will be available for employers and employees in
early January by calling 1-800-TAX-FORM (1-800-829-3676).
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