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Must I return my child-credit check?

by on
in Small Business Tax

Q: A recent Mail Call question addressed whether a taxpayer would have to return the $400 advance child tax rebate if his income was too high for 2003. (See 10/06/03 issue.) While your answer indicated that he would not have to write a check to the IRS, I believe that the additional credit would still have to be added back to his 2003 tax liability on his return. Do you agree? J.W., via e-mail

A: Not necessarily. The child tax credit claimed on your 2003 return must be reduced—but not below zero—by any advance child tax credit payment you received in 2003. Since the credit can't be reduced below zero, this could represent a windfall for someone who received an advance payment but would not qualify for any credit on a 2003 return because of the income limits. The IRS used a similar methodology in handling advance checks in 2001.

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