Child Tax Credit: What Expats and can expect from IRS this year
The definite explanation of child tax credit is a specific amount that can be deducted by parents from their tax bills in the US for every single child that qualifies for the same. It is approximately $2000 for each child. So, as per tax consultants in New Orleans, if you have three children, you will be allowed to get a $6000 reduction on your US tax bill.
However, recently with the implementation of the American Rescue Plan by President Biden in March 2021, the amount changed from $2000 to $3600 for every child between the age of 0 to 6 years and $3000 for every child that ranges in the age group of 7 to 17 years.
The new changes to note under this changed child tax credit include the following-
- Firstly, the child should be a citizen of the United States of America.
- The next important thing is that the child should have a social security number against their name.
- The third point is the age of the child which should be a maximum of 17 years or younger during the tax year for which the returns are being filed.
- The child or children against whom you are claiming it should be living with the parent for a minimum of six months out of the entire year.
- You can also benefit from a full refund on the credit instead of partial repayments that happened before. Additionally, according to US tax consultants in Toronto, you can also claim an advance of half of your child tax credit through monthly payments for 6 months.
What About the Expats?
The new changes in the child tax credit under the American Rescue Plan may not be applicable for American expats. However, most American parents living away from the country may still be eligible to benefit from the standard child tax credit on their tax bills. There are only two important things to keep in mind according to an international tax consultant in New Orleans and they are as follows-
The first and the most important thing is that if you take advantage of the exclusion of foreign and income to directly reduce your taxable income, you will not be able to benefit from the child tax credit returns and deductions in your tax bills.
Another important criterion to be able to benefit from the child tax credit as per a tax consultant in New York is that you need to reside in the states for at least six months to be able to apply with the IRS this year.
To conclude, the benefits of child tax credit or not are limited to just the residents. However, you need to understand and be aware of all the prerequisites and mandates as an expat to be able to plan successfully and file with the IRS on a timely basis. For more doubts and inquiries, it is always beneficial to reach out to a tax consultancy service that can guide and support you better with all your questions.
