Information On Tax Credits & Tax Deductions

Proposal To Do Away With Child Tax Credits

There has been a recent proposal by lawmakers that will deny tax credits to children as well as undocumented immigrants if passed. In order to claim the credit, people will have to prove that they are legal workers by presenting their social security number.

The effort has roused anger among Hispanics and some Democratic lawmakers. However it's being offered as a way to help pay for extending the payroll tax cut and is projected to reduce federal spending by about $10 billion over a decade. (Currently the IRS checks average about $1,800).

The Treasury Department says that in the 2010 filing year more than $4 billion in child credit payments went to 2.3 million people who filed tax returns but didn't have Social Security numbers proving they were citizens or legal workers. That's a 4x increase over five years earlier.

Congress needs to find about $160 billion between now and the end of the month to cover the costs of extending through December 31 a Social Security tax cut averaging about $20 a week for 160 million workers, unemployment benefits for the long-term jobless and unreduced Medicare fees for doctors. All are now due to expire February 29 2012.

There is much controversy and debate over this new proposal. Only time will tell if it will eventually be passed or not.