Family is so important that our love for them remains strong, whether they live near or far from us. That is why we will always be ready to help them, no matter where they are. Sometimes we send them big boxes full of gifts and keepsakes for a special occasion during the year or just because we feel like it. But what if your help goes beyond sending a few gift boxes each year?
Many are ready to offer substantial financial assistance to family members living in a foreign country. If this is your case, now that tax time is approaching, you are probably wondering: am I entitled to tax relief if I financially support my family members living abroad?
To get answers to this and any other questions about your tax situation, TurboTax ask you simple questions and tell you what deductions and tax credits you are entitled to based on your answers. TurboTax Online tax experts are also available in English and Spanish, all year round, and can even review, sign and file your tax return or you can fully remit your taxes their.
Although TurboTax gives you the tax deductions and credits you are entitled to, see what you may be eligible for below.
What are the basic requirements?
It is true that the IRS may allow taxpayers to claim family members living abroad that they support financially, however, that does not mean that you can automatically deduct any financial assistance you provide them. As with any other tax deduction, there are requirements that accompany the tax relief. Especially after Congress passed the Tax Cuts and Jobs Act in late 2017, which changed tax benefits for dependents.
There are two ways to claim a dependent: an eligible child and an eligible parent. The first one mentioned, Eligible Child, is unlikely to be an option if your dependent child does not live with you since the dependent child must live with the taxpayer for more than half of the year to be eligible. On the other hand, if you are financially supporting your loved ones living abroad, you may be able to claim them as Eligible Parents if you meet certain conditions.
What are these requirements? Here are a few:
- You cannot claim a family member that you are financially supporting as a dependent if they are a U.S. citizen, U.S. national, U.S. resident alien, or U.S. citizen. resident in Canada or Mexico. For example, if the family member you are supporting lives abroad in a foreign country other than Canada or Mexico and is not a U.S. citizen, U.S. citizen, or US resident alien -United, you will not be able to claim him as an eligible parent on your tax return.
- They must also pass the relationship test. What does it mean? Well, they have to be one or the other of these: your child, a legally adopted child, a stepson, a foster child, a descendant of one of them (for example, your grandchild), your brother, sister, half-brother, half-sister, half-brother, half-sister, your father, mother, grandparent or other direct ancestors, but not adoptive parent, your step- father or mother-in-law, a son or daughter of your brother or sister, a son or daughter of your half-brother or half-sister, a brother or sister of your father or mother, your son-in-law, daughter-in-law, beautiful -father, mother-in-law, brother-in-law or sister-in-law.
- The gross taxable income of the parent you are supporting must be less than $ 4,300 in 2021 (this amount will increase for future tax years).
- As a taxpayer, you must have provided more than half of the parent’s support during the tax year.
Also take into account that your loved ones will need a tax identification number to claim them. This can be a Social Security number or an ITIN (Individual Tax Identification Number), which you can request by submitting a W-7 form.
What are the tax advantages?
While it is true that you can potentially claim your family members living abroad as dependents, applying for an eligible parent will not entitle you to other benefits of having a child. dependents as the head of the family and certain other tax credits related to dependents. kids love the earned income tax credit and the child tax credit.
You can apply for a loan called the Other dependent credit (ODC) up to $ 500 for dependents who are not children. Contrary to Child tax credit, you can claim the other dependent credit if your dependent is your child over the age of 17, your child has an ITIN, or other family members. As part of the tax reform, your dependent child needs a social security number and not an ITIN in order for you to claim the child tax credit.
If you need to file a tax return for a tax year before 2019, you can still claim the family member you supported and claim a dependent exemption or deduction. Remember, if you want to claim a credit or deduction that you missed, you can file within 3 years of the return due date. Yet, whether or not you can claim a tax benefit for the financial assistance you give to your family living abroad, nothing can deprive you of the joy and satisfaction of helping them.
If you have any questions, you can connect live via one-way video to a TurboTax Online tax expert with an average of 12 years of experience to get your questions answered. TurboTax Live’s tax experts are available in English and Spanish year-round to answer your questions and can review, sign and file your return. You can also hand your taxes over to a TurboTax Live tax expert and have them done from start to finish. All in the comfort of your own home.