What you should know
- U.S. citizens and lawful permanent residents who send funds to a dependent child or spouse living in countries like Mexico and Canada may be eligible for a tax credit of up to $500 offered by the IRS for each of these dependents.
- Remittances must be at least half of the money used by dependents for their subsistence.
- It is important for the taxpayer to discuss with his tax preparer beforehand to find out about his particular case, the documents he would need and whether he is eligible. For more information on the requirements for claiming dependents, go to the IRS page here.
NEW YORK – Thousands of families in our area are sending money to loved ones outside the United States to help with a variety of day-to-day expenses.
What many don’t realize is that U.S. citizens and lawful permanent residents who send these funds to a dependent child or spouse living in countries like Mexico and Canada could qualify for a credit. tax of up to $500 offered by the IRS. these dependents.
Remittances must be at least half of the money used by dependents for their subsistence.
Tax season started on January 23 and ends on April 18, so there’s still time to claim this credit if you qualify. Additionally, April 18 also marks the last day to request an extension via IRS Form 4868.
IMPORTANT: Dependents do not need to be citizens or permanent residents to claim this credit. If the taxpayer meets the criteria for this aid, but has never applied for it, then he could apply for a refund for the last three years, according to experts.
It is important for the taxpayer to discuss with his tax preparer beforehand to find out about his particular case, the documents he would need and whether he is eligible.
For more information on the requirements for claiming dependents, go to the IRS page here.
The IRS notes on its website that if you are a resident of Mexico or Canada or a national of the United States, you can claim each of your dependents who meet certain tests. Residents of Mexico, Canada, or US nationals must follow the same rules as US citizens to determine who is a dependent. See Publication 501 for these rules.
The taxpayer must show the SSN of all dependents they include in the Dependents section of their Form 1040-NR, US on the Nonresident Alien Income Tax Return. If you do not include this information, certain tax benefits may be denied.
The money that Mexican migrants in the United States send home to their families has increased by 13.4% in 2022, to a total of $58.5 billion over the year, the Bank of Mexico reported in early February.
This figure is a record for migrant remittances to Mexico, but represents a slowdown in growth. In 2021, remittances grew by an unusual 27.1% to a total of $51.6 billion.
Observers say the lower rate of increase could be due to slowing economic growth in the United States – where most Mexican migrants work – as well as rising inflation and a stronger Mexican peso .
Remittances already exceed almost all other sources of foreign exchange in the country, including tourism and the export of oil and most manufactured goods.
Mexico receives more money from remittances than any other country except India. Indian migrants send home about $100 billion a year. Chinese remittances have been affected by the coronavirus pandemic.
Yet no one gets rich from remittances to Mexico; the average amount sent by each migrant was $391 (nearly 7,300 pesos), according to the Bank of Mexico.
BBVA Research said in a report that remittances to Mexico have increased for 31 consecutive months, a streak that began in May 2020 when the pandemic hit the country.
“By 2023, remittances are estimated to continue to grow, but at a more moderate pace, due to a possible scenario in which the global economy could slow its growth,” the bank said.
Remittances as a percentage of Mexico’s GDP have nearly doubled over the past decade, from 2% in 2010 to 3.8% in 2020, according to the government. During this decade, the percentage of households in Mexico that receive remittances rose from 3.6% to 5.1%.