April 2024 CSQ

More documents

Recommendations

Info

the parent who receives support is the parent with whom the child lives for most of the year—one requirement for claiming the EITC and the CTC. However, parents who pay support generally do not qualify for the EITC and CTC due to the residential requirements. If a parent who pays support has a qualifying child and meets all other eligibility criteria, he or she may be able to claim the EITC and the CTC to include the amount for the qualifying child. However, both parents cannot claim the EITC and CTC for the same child in the same tax year. In cases of shared custody, the Internal Revenue Service (IRS) typically allows the parent who receives support to claim the credit unless there is a written agreement or court order specifying otherwise. The differential impacts of the EITC and the CTC and Head of Household filing status on parents who live apart: An Example This scenario provides an example of how two parents living apart receive substantially different tax benefits with respect to the EITC, the CTC, and Head of Household filing status. iv The facts of this scenario are as follows: two parents, Pat and Sam (both 30 years old), have one five-year-old child, Dana. Pat and Sam were never married, and they live in separate households. Pat and Sam have never gone to court to establish child support, though parentage was established administratively at the time of Dana’s birth. Dana lives most of the year (nine months) with Pat, and she lives with Sam for three months during the summer. Both parents earn the same income, and they equally share the cost of childcare and medical expenses. The following tables demonstrate the results of applying the current EITC and CTC eligibility rules to Pat and Sam based on increasing income levels.
Income of both parents: $15,000 Parent Filing Status Standard Deduction AGI v EITC CTC Federal Tax Refund Total Tax Benefits Pat HH vi $20,800 $15,000 $3,995 $2,000 $5,595 $11,590 Sam Single $13,850 $15,000 $201 $0 $87 $288 Income of both parents: $25,000 Parent Filing Status Standard Deduction AGI EITC CTC Federal Tax Refund Total Tax Benefits Pat HH $ 20,800 $25,000 $3,442 $2,000 $ 5,026 $ 10,468 Sam Single $ 13,850 $25,000 $ 0 $ 0 ($ 1,118) ($ 1,118) Income of both parents: $40,000 Parent Filing Status Standard Deduction AGI EITC CTC Federal Tax Refund Total Tax Benefits Pat HH $20,800 $40,000 $1,045 $2,000 $1,059 $4,104 Sam Single $ 13,850 $40,000 $0 $0 ($2,918) ($2,918) What can be done to reduce the disparity? The differential impact of the EITC and CTC and Head of Household filing status on parents who pay support in comparison to parents who receive support could be mitigated through congressional action. One approach would be for Congress to expand the EITC, CTC, and Head of Household eligibility criteria to include parents who pay support and who have significant parenting time or are current in meeting their financial child support obligations. Another approach would be to create alternative tax benefits or credits specifically targeted at parents who pay support. These credits could be designed to provide financial assistance or incentives for employment, education, or other activities that support the well-being of their children. Conclusion Parents who meet their child support obligations are supporting their children, just in a different way from custodial parents. Yet, low-income parents who pay child support, in particular, are taxed at a much higher effective rate than parents who receive support. This provides a challenge
Page 2 and 3: Table of Contents April 2024 Execut
Page 4 and 5: innovative solutions. I attended se
Page 7 and 8: Balancing Act: The Shifting Focus o
Page 9 and 10: Rightfully, the child support progr
Page 11 and 12: Moving the Program Forward: Final R
Page 13 and 14: to protect and enhance Tribal lands
Page 15 and 16: now has “an important tool to hel
Page 17: of the Tax Reduction Act of 1975. O
Page 21 and 22: From Customer to Commissioner by Vi
Page 23 and 24: Employment Demonstration (CSPED). I
Page 25 and 26: support. Better-off fathers, on the
Page 27 and 28: ACF meet with stakeholders to reexa
Page 29 and 30: communications strategy and conduct
Page 31 and 32: Creation of the Child Support Reent
Page 33 and 34: incarcerated parent with a copy of
Page 35 and 36: NCSEA 2024 Policy Forum Wrap-up:
Page 37 and 38: employment on the various programs
Page 39 and 40: Carla West Connie Chesnik Corrinne

April 2024 CSQ

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?