The Act increases the child tax credit to $1,000 per child for 2003 and 2004. Under prior law, it was $600 for 2001 through 2004, and $700 in 2005.

The increase in the credit in 2003 ($400 per child) will be paid to taxpayers during 2003 in the form of an advance refund. Most taxpayers automatically will receive a check based on filing status and income shown on their 2002 returns.

For example, a married couple filing a joint return with two eligible dependent children and adjusted gross income in 2002 below the threshold (in this example, $110,000) will receive a check in 2003 for $800. The Act directs the IRS to issue refund checks before October 1, 2003. Taxpayers who receive an advance refund will need to reduce the amount of the child credit allowed on their 2003 return by the amount of the refund (but will not be required to refund any excess over their actual 2003 credit).