SAN LUIS OBISPO COUNTY, Calif- People who are considered lower income earners may now lose certain tax credits if congress does not make a decision on whether to extend them.
Without the extension of crucial tax credits, a lot of families will lose money they depend on each year. Two major tax credits set to change are the Child Tax Credit and Earned Income Tax Credit. The Child Tax Credit allows up to 1-thousand dollars for each qualifying child under the age of 17.
"If they have the tax it will reduce the tax but instead of reducing it by 1-thousand dollars it will only reduce it by 5-hundred dollars per child under the age of 17, so you can lose it there and there was also a refundable component that will go away completely," said CPA Jayme Phillips.
The Earned Income Tax is a refundable credit depending on your income and how many children you have. "It's basically for people who are living off their paychecks and who have children and if they are making a minimum amount of income to where at the end of the year an extra thousand dollars to them is huge," said Phillips.
Results, a Washington based organization that lobbied congress to extend the Child Tax Credit and the Earned Income Tax in 2010 said the expiration could affect millions.
It's said 6.9 million families will lose their Child Tax Credit and 10.2 million will lose a portion and 1.3 million families will lose their Earned Income Tax and 2.4 would see a reduction. Results added that these credits helped to keep millions of people out of poverty.
Now all these credits made during the Bush Era, are set to phase out. "The Bush Era tax cuts made all these credits bigger and more helpful, now they are scaling that back down again to what they were before," said Phillips.
The Child and Dependent Care Credit, which helps certain families to pay for childcare as well as the American Opportunity Tax Credit which helps students pay for tuition are also set to change.
There is still time before tax filing season for congress to make a decision.
