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 Illegal Aliens Claiming Child Tax Credit on Children not Living in U.S.

 

Allegations that child tax credit are being claimed by illegal aliens for children living outside the U.S.

iRumorMill.com Determination: Real but with New Eligibility  Updates

Child Tax CreditsThis was a tax loop hole that was costing the American taxpayer $4.2 billion, according to a July 7, 2011 audit report by the Treasury Department.

All workers in the U.S., legal or illegal, are required to report income to the Internal Revenue Service (IRS), and non-citizens are issued a tax identification number, which the IRS refers to as ITIN.

The report said, "Although the law prohibits aliens residing without authorization in the United States from receiving most Federal public benefits, an increasing number of these individuals are filing tax returns claiming the Additional Child Tax Credit (ACTC), a refundable tax credit intended for working families.  The payment of Federal funds through this tax benefit appears to provide an additional incentive for aliens to enter, reside, and work in the United States without authorization, which contradicts Federal law and policy to remove such incentives."

 

The iRumorMill.com Crew visited the IRS website and found that the agency has updated the standards for eligibility for tax credits.

IRS Tax Tip 2011-29, February 10, 2011

The Child Tax Credit is an important tax credit that may be worth as much as $1,000 per qualifying child depending upon your income. Here are 10 important facts from the IRS about this credit and how it may benefit your family.

  1. Amount - With the Child Tax Credit, you may be able to reduce your federal income tax by up to $1,000 for each qualifying child under the age of 17.

  2. Qualification - A qualifying child for this credit is someone who meets the qualifying criteria of six tests: age, relationship, support, dependent, citizenship, and residence.

  3. Age Test - To qualify, a child must have been under age 17 age 16 or younger at the end of 2010.

  4. Relationship Test - To claim a child for purposes of the Child Tax Credit, they must either be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew. An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

  5. Support Test - In order to claim a child for this credit, the child must not have provided more than half of their own support.

  6. Dependent Test - You must claim the child as a dependent on your federal tax return.

  7. Citizenship Test - To meet the citizenship test, the child must be a U.S. citizen, U.S. national, or U.S. resident alien.

  8. Residence Test - The child must have lived with you for more than half of 2010. There are some exceptions to the residence test, which can be found in IRS Publication 972, Child Tax Credit.

  9. Limitations - The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status. For married taxpayers filing a joint return, the phase-out begins at $110,000. For married taxpayers filing a separate return, it begins at $55,000. For all other taxpayers, the phase-out begins at $75,000. In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.

  10. Additional Child Tax Credit - If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit.

 

Posted 11/25/14

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