Extension of child tax credit: Is it going to be some relief for non-resident citizens?
In America, the cost of raising a child has been a financial burden for most citizens, especially families with lower daily incomes. As part of Joe Biden’s American rescue plan, the proposed extension of the child tax credit has its own benefits for the population, both residents and expats. The major expected changes with this extension, after approval, include an increased child tax credit of $1000 for every child of age 17 and below. According to US tax consultants in Toronto, the main intention behind this proposed extension is to help families with low income by allowing better returns and complete refunds as opposed to the ongoing partial refund policy.
Child Tax Credit; Explained
In Layman terms, the child tax credit is similar to other types of credits applicable to the residents and expats. Under this child tax credit, the overall owed amount in taxes is lowered and is applicable for refund in situations where there is no tax applicable from your end. This refundable quality allows families with higher income to enjoy a lower tax liability and lower-income families to enjoy the availability of additional funds. However, as per international tax consultants in Toronto, the biggest advantage of this proposed extension is the monthly advance payment option applicable from 15 July 2021 for all eligible taxpayers.
Impact on Non-Resident Citizens
According to tax consultants in New York and other parts of the United States, if the American rescue plan active 2021 comes into action, it is expected to reduce the number of families with children living in poverty by approximately 45%. The eligibility criteria for availing the benefits of the extension of child tax credit are the same for all citizens of the United States, regardless of their current place of residence, under the following mandates.
Two Mandates of Child Tax Credit
As per an International tax consultant in New Orleans and other parts of the United States, is that if you choose to reduce your taxable income with the help of exclusion of foreign earned income, then you are not eligible to claim the child tax credit benefits and returns.
In order to benefit from the American rescue plan 2021, as a non-resident, you will have to be in the States for a minimum of six months in 2021 alone to avail of the benefits like advance payments and full refunds.
To conclude, Biden’s intention to provide additional relief to the citizens, both financially and otherwise, especially since the aftermath of the global pandemic, can help families of all stature to live better lives. Additionally, with the possibility of further extension of the America Rescue Plan from 2021 up till 2025, the living standards will improve drastically, closing the gap between the rich and poor.
