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$118 million in tax money goes unclaimed

Are you still waiting for your child tax credit? It might be one of the almost 116,000 checks that were returned to the Internal Revenue Service as undeliverable.

The money still can be yours in time for holiday shopping -- as long as you get in touch with the IRS by Dec. 5.

Last summer's tax-cut bill increased the amount of this popular tax credit and made the bigger tax break immediately effective. So that parents wouldn't have to wait until they file their returns next year, advance payment of the extra credit amount, as much as $400 for many eligible parents, started going out in July.

But bad addresses forced the postal service to return some of the tax windfall to Uncle Sam.

In addition to the child tax credit cash, the IRS is holding money for taxpayers who also missed their regular income tax refunds this year because of incorrect mailing data. The total just waiting to be claimed: around $118 million. The misdirected child tax credit advances account for more than $50 million; another 92,810 tax refund checks come to more than $66 million, an average of $722 per check.

If a chunk of this tax change belongs to you, let the IRS know your correct address by the December deadline or you'll have to wait until you file your taxes next year to get the money.

"Time is running out to get an advance child credit check," noted IRS Commissioner Mark W. Everson. "Our goal is to get this money back in the hands of the people it belongs to, and we want to get the checks out as soon as possible."

You can check whether you're due a refund or child tax credit advance, as well as the status of your money, online. The IRS Web site Where's My Refund? provides information about refunds and Where's My Advance Child Tax Credit? has information about the tax credit.

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To check either, you'll need to provide your Social Security number and filing status, such as single or married filing jointly. For a refund inquiry, you must know the refund amount shown on your 2002 tax return. To find out about your advance child tax credit, you'll have to enter the number of exemptions shown on your return.

When the required information is submitted online, you should see subsequent Web pages that show the status of the refund or advance child tax credit check. In many cases, the IRS says taxpayers also will get instructions to help them resolve problems. For security purposes, your browser must have the latest encryption technology. If it doesn't, you'll get an error message.

If you cannot or do not want to upgrade your Web browser, you can call the IRS toll-free at 1-800-829-1040 to find out your refund status information. You also can call that number to let the IRS know your correct address

$400 per child possible, not guaranteed
The IRS reviewed all tax returns filed earlier this year to determine just who is eligible for the advance child tax credit checks and how much they will get.

Where parents filed a joint return, the Social Security number listed first on the 1040 will be used as the mailing guide. For separated or divorced parents, the advance credit check went to the parent who claimed the tax break on last year's return.

The actual amount of advance credit a parent receives also is determined in part by the filer's total income. If you made too much money, you didn't get the full tax break.

The credit began phasing out if you made $110,000 and were married and filed a joint return; earned $75,000 and filed as head of household, single or qualifying widow or widower; or made $55,000 and filed as a married-filing-separately taxpayer.

And not every parent got a check.

The money was distributed based upon 2002 filing information. If your child was born or adopted this year, you must wait until you file your 2003 return to claim the new, larger credit. Your actual tax situation will determine your eligibility for the credit and the amount you're due on your upcoming return.

Low-income eligibility limits
The credit's income restrictions don't just apply to wealthier parents. Those who make too little are left out in the credit cold.

As part of last-minute legislative maneuvering to keep the tax bill within budget guidelines, a provision was axed that would have made the expanded child tax credit available to workers who do not owe income taxes because they do not earn enough.

The Senate and House have approved separate measures to reinstate the credit for the 6.5 million low-income workers now excluded. However, the two bills differ on the distribution of the credit. The House version also includes additional tax breaks that many Senators oppose. Lawmakers must reconcile the two bills before any lower-income taxpayers see benefits.

And even the approved child tax credit increases that went out (or came back to the IRS) this summer are only temporary.

Previously, the credit was set to gradually increase until it reached $1,000 in 2010. The new law speeds up that process, hiking it to $1,000 for both 2003 and 2004 tax years. But if the law isn't extended after 2004, the amount will decrease slightly and go back to the earlier phase-in schedule.

-- Updated: Oct. 27, 2003
Read more stories by Kay  Bell
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See Also
Claiming child and additional child tax credits
The tax joys of parenthood

Wrong address could mean missed refund

Tax glossary
More tax stories

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