Waiting for additional child tax credits

Q: I'm confused with all this tax talk. Is the child tax credit now going up to $1,000? Does that mean people in lower tax brackets like myself (0-10 percent) will receive the $400 child rebate, or is it only for people in higher tax brackets?
S.H., Woodland Hills, Calif.

A: You seem to have caught Congress at a bad moment. It did indeed pass legislation on May 28 that boosted the federal Child Tax Credit from $600 to $1,000. And starting in July, checks will be sent to about 25 million taxpayers as an advance payment on the credit, which is effective this year and retroactive to Jan. 1.

But, oops, this generosity left out millions of people in either very high or very low income brackets. For low-wage earners, the rationale apparently was that since people in this income area don't pay much in taxes, the extra dough would amount to unjust enrichment.

The Senate, however, passed a bill in early June that would patch this up and get money to you. Now the House has to tackle the bill again. So stay tuned.

By the way, for those who do qualify, the IRS says they need not take any action. Using taxpayers' 2002 returns, it will automatically calculate who is due how much, and pop a check in the mail.

Q: I was recently fired by my employer because of vehicle problems. I am a journeyman carpenter and I have now been prompted to go into business (contracting) for myself. My credit has been destroyed by medical bills and my child support is outrageous. I can't find lenders or grant money to get started. I need this help for the sake of my family's future. I need advice or help on what I should do.
G.T.A., via e-mail

A: The first step should be to contact your local child-support-collection unit. Let them know about your current financial situation and, with proof, it should be able to temporarily adjust your payments.

While you may aspire to go into business for yourself, Chris Viale, of Cambridge Consumer Credit, a debt-counseling service in New York, suggests putting those plans on hold and first improving your credit.

Mr. Viale suggests finding a job working for another contractor so that you'll be able to rely on a consistent stream of income. With that money, you should be able to rebuild your credit. Doing so will ultimately help you when you go into business for yourself and approach banks for loans.

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