Real-Life Communication
Many people can't be bothered to read all that's written in benefit
plans, insurance papers and legal documents. It's an employee benefits coordinator's
job to read and understand the fine print.
"You have to be able to
communicate to board members and executive directors, and then you also have
to be able to communicate with lower level employees," says employee benefits
manager Princess Starr. "So your employee benefits communications have to
be tailored... to meet the needs of various types of employees."
You
are an employee benefits coordinator calculating income tax for an employee.
The employee is wondering whether he can have the amount of income tax taken
off his check each month reduced because he might be entitled to a child tax
credit.
You tell the employee that he will probably have to claim this
amount at the end of the year. But in order to answer his question, you must
read the income tax rules.
Income Tax Rules on Child
Tax Credits
If you have a child who is under the age of 17 at
the end of the year, you might be able to collect one or both of two credits:
the child tax credit and the added child tax credit. A credit is an amount
of earned income that you don't have to pay income tax on.
The total
of each of these child tax credits cannot be more than $400. If you have three
or more children who qualify for the credit, and you aren't able to claim
the full $400, you may be able to claim the added child tax credit.
You
can figure out if you qualify for a credit by examining these requirements.
The child must be your dependent, which means that you must be financially
supporting them. They must be under the age of 17. They must also be your
son, daughter, adopted child, grandchild, stepchild or foster child.
Please
note that a child that has been placed with you by an authorized placement
agency for legal adoption is considered an adopted child, even if the adoption
is not final.
Questions
- What age must a child be in order for you to collect a child tax credit?
- What is a credit?
- What is the maximum amount that the credit can be?