American families, who are in a low-income bracket, can claim certain tax benefits. To ascertain the amount, and level at which such benefits attract to the family, depends upon a) whether it is a single parent family or b) in the case of a two parent family environment, the level of the joint earnings.
In the US, there is a system called Earned Income Tax Credit (EITC). Under this system around 17% of families, close to 20 million, are able to claim this. To ensure that they get the benefit the family has to file an annual joint tax return, signed by both parents. In the income for a family with two children or more, is less than just below $9,000 for the year, the tax credit is 40%, and there is a scaling down of this amount above that figure until the income reaches $11,500, when the credit stops completely. Unlike the UK system, where the benefit is paid weekly, in the US it is paid after the end of the year by a single repayment. The problem with this system is that people who don’t have to file tax returns tend not to take advantage of it.
Single parent families can also claim benefits under the Aid to Families with Dependent Children program, which was replaced by the Temporary Assistance for Needy Families program in 1996. Whilst this is provided under the Social Security Act, the levels and rates at which this applies differs from state to state.
There are special tax benefits available to members of the armed forces and coast guards. These include an extended period in which to notify the amendment to the tax return for the 5-year period for the sale of principle property system; an increase in the tax-free death benefit to $12,000, and additional allowances; tuition payments, homeowner and care assistance. The full scope of the benefits for military personnel is outlined in the Military Family Tax Relief Act 2003.
Having been a UK accountant, trained in UK tax laws, I have only limited knowledge of the US tax system and would recommend that any US family seeking tax benefits, should avail themselves of the assistance that the IRS can provide for this area of Taxation.