What is the working family tax credit?
Even those who consider themselves well-versed in the inner workings of their government often find themselves perplexed over the ins and outs of tax code, especially when the names of different tax terms originating from separate locales seem to overlap, as is the case with the Working Family Tax Credit.
Different Working Family Tax Credit Locations
The name "Working Family Credit" has been applied to at least four different tax credit names in two countries: the United Kingdom and the United States. From 1999 to 2003, the United Kingdom called a tax-based, transitional social security benefits program the Working Families Tax Credit, before it was replaced by the Working Tax Credit. Minnesota and New Mexico, both U.S. states, are homes to state-level earned income tax credit programs that share a similar title. San Francisco also calls a local tax refund program by the same name.
U.K. Tax Credit
The U.K.'s Working Family Tax Credit was a temporary social benefit program meant to ease the transition between the Family Credit and the later implemented Working Tax Credit. This credit was available through Inland Revenue for any family of limited means where at least one person worked full time. The Working Family Tax Credit made many important changes to the disbursement of benefits; one example includes allowing either person in the couple to accept benefits rather than only the woman, which was the prior rule.
Minnesota Tax Credit
Minnesota's Working Family Credit is a state-level version of the Federal Earned Income Tax Credit. The amount of both tax credits are determined by using a percentage of the earner's income and are refundable, which means that if the amount is greater than the taxes paid by the earner, the government issues a refund check. All Minnesotans who receive the Federal Earned Income Tax Credit are eligible for the Working Family Credit.
New Mexico Tax Credit
Similar to Minnesota, New Mexico titles its state level Federal Earned Income Tax Credit program "The Working Family Tax Credit." New Mexicans can reduce or eliminate their state income tax liability if they qualify for the Federal Earned Income Tax Credit. This credit is also refundable, often resulting in a refund check for recipients of the credit. Unlike the Minnesota credit, the amount is not based on a percentage of income but is calculated using a percentage of the Earned Income Tax Credit received.
San Francisco Tax Credit
San Franciscans enjoy an extra boost to their tax refund bottom line each year through the local Working Family Credit, which is given to all city citizens who qualify for the Federal Earned Income Tax Credit, have at least one dependent child and file by April 15. The amount dispersed varies from £32 to £81, depending on whether the filer chooses to directly deposit the amount into a bank account or requests a paper check.