What Is the Non-Refundable Family Size Tax Credit?
Most states levy a state income tax in addition to federal income taxes. State tax regulations are typically similar to federal tax regulations in that the tax systems are somewhat progressive; personal exemptions and deductions for dependents allow those with lower incomes to usually pay less. Some states, like Kentucky, only allow relatively small personal exemptions and deductions, but offer other tax credits -- such as a nonrefundable family size credit -- to lower the tax burden of low-income individuals and families.
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Kentucky Nonrefundable Family Size Tax Credit
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The Kentucky Nonrefundable Family Size Tax Credit (FSTC) is a state income tax credit for low-income families. The FSTC, which was passed in 2005, is designed to provide income tax relief for individual and married couple filers earning less than 133 percent of federal poverty standards. According to Kentucky Youth Advocates, even with the FSTC, Kentucky still has a high rate of low-income filers having to pay income taxes compared with most other states.
Kentucky Nonrefundable Family Size Tax Credit Details
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According to the Kentucky Department of Revenue, if your 2010 total family modified gross income is $29,327 or less, you may qualify for the Kentucky Family Size Tax Credit. This MGI ceiling is for families of four or more; one, two or three member households have smaller MGI limits to qualify for the FSTC.
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Family Size and Qualifying Dependent Children
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Kentucky calculates family size as the taxpayer, a spouse if married and living in the same residence and qualifying children. For the purposes of computing the Family Size Tax Credit, the maximum family size is four (for example, the credit is the same whether you have two, three or four children). Qualifying children must be blood relatives or adopted, under age 19, live in the same residence, and the taxpayer must provide at least half of the total support for the child.
Nonrefundable Tax Credit
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A nonrefundable tax credit can be used to offset any tax liability, but any amounts over the tax liability are not returned to the taxpayer as a refund. For example, if you are due an FSTC credit of $1,500 based on your family size/MGI, but you only actually owe $1,300 in taxes, you do not receive the $200 difference as a refund.
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