Seal of the Office of the State Comptroller

MEMORANDUM NO. 98-9

February 20, 1998

TO THE HEADS OF ALL STATE AGENCIES

ATTENTION: Chief Administrative and Fiscal Officers, Business Managers, and Payroll and Personnel Officers
SUBJECT: New Child Tax Credit
  1. PURPOSE

    The purpose of this memorandum is to provide payroll information concerning the new child tax credit.

  2. AUTHORITY

    The child tax credit is a provision of the Taxpayer Relief Act of 1997.

  3. CHILD TAX CREDIT

    The new child tax credit has been included in the worksheet for the 1998 Form W-4, Employee's Withholding Allowance Certificate. The amount of the credit is $400 for each eligible dependent who is under the age of 17 at the end of 1998. The credit begins to phase out when adjusted gross income reaches $75,000 for singles, $110,000 for joint filers and $55,000 for married persons filing separately. The credit is reduced by $50 for each $1,000 of income above the threshold amounts. A qualifying child is a child, descendant, stepchild, or eligible foster child under age 17 at the end of 1998, who is a U.S. citizen and claimed as a dependent by the taxpayer.

  4. FORM W-4

    Employees who are eligible for the child tax credit can file a new 1998 Form W-4 with their payroll office to have their withholding decreased. Agencies can obtain paper copies of the 1998 Form W-4 from Internal Revenue Service (IRS) offices. The 1998 Form W-4 is also available on the IRS web site at www.irs.ustreas.gov. The child tax credit is line G of the Personal Allowances Worksheet for Form W-4. For further details on adjusting withholding for the child tax credit and other credits, employees may consult IRS Publication 919, Is My Withholding Correct for 1998? It is the employee's responsibility to seek tax counseling, if needed, regarding changes to his or her Form W-4.

  5. GENERAL
     
    Please direct questions as follows:
    Payroll Procedures: Payroll Services Division, 702-3448.
    Memo Interpretation: Policy Services Division, 702-3437.

 

NANCY WYMAN
STATE COMPTROLLER

NW:CH

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