Changes To Tax Credits in 2012
What is a tax credit?
A sum might be subtracted from the total tax that a person owes to the government. This sum is known as a tax credit. Tax credits can be for different kinds of taxes. Some of these include income tax, VAT, or property tax. You can get tax credits in accordance with your tax payment history. These might be granted for many reasons such as for encouragement of investment or other things. In some states, tax credits can also be refunded in special circumstances. Other than individuals, businesses are also allowed to take tax credits if they want.
2012 tax credit changes
The laws for tax credits are going to be altered from April 6, 2012 onwards. These laws for tax credits that are being changed are regarding income limits, working hours, and the time period for which payments can be backdated. Hence, everyone should be prepared for these changes.
Here are the most important changes that are going to be done to the tax credit laws in 2012.
? Income limits for child tax credits
These days, the factors that affect ‘child tax credit’ payments are a person’s personal circumstances and his or her yearly income. According to the present laws regarding tax credits, people are allowed to receive tax credits if their yearly income is less than 41,000 pounds.
These are the present laws, however, in a few months this limit will be reduced for the population. The following are going to be a part of the updated rules:
o You cannot get tax credits if you have one child and your income is more than 26,000 pounds.
o People who have two children and if their income is above ?32,000 then they are also not going to receive any child tax credits.
However, in some circumstances people can still get child tax credits like for example if they have the same income but have more than two children.
? Working hours laws for working tax credit
According to the present rules if a person works for at least 16 hours every week and has one child, then he/she can get working tax credit. Nonetheless, 2012 rules state that the total amount of time that a couple works per week should be at least 24 hours. This means that each person in a couple should work for at least 16hours in order to receive working tax credit. Moreover, if only one person is working then he should work 24hours per week to be eligible for working tax credit.
Read more about working tax credits over 60 and federal tax brackets 2012.
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