Unless Congress takes action before the end of the year, four important credits for families — The Child Tax Credit, Earned Income Tax Credit, Child and Dependent Care Credit and the American Opportunity Credit — will revert back to previous levels.
If this happens, many families will be worse off by hundreds — or even thousands — of dollars, said Roberton Williams, a senior fellow at the Tax Policy Center.
“If you have what it takes to qualify for these particular benefits, you will get hit,” said Williams.
Some families will take a hit on several fronts if they qualify for more than one tax break. A low-income couple with three kids, for example, will lose as much as $1,500 from expiring provisions of the Child Tax Credit. If their income is low enough, they could also see a smaller refund from the Earned Income Tax Credit, and benefits from the Child and Dependent Care Credit could be reduced as well.
The upcoming presidential election has left the fate of these tax breaks uncertain. Democrats and Republicans in Congress continue to butt heads about which tax cuts should be extended, and there’s virtually no chance they will agree on a specific plan before the November election, Williams said.
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