How to get a $500 IRS credit if you send money to Mexico
Taxpayers who send money to Mexico can reduce taxes when they file their return with the IRS. Find out which cases are qualified for this tax reduction.
The tax season for the year is in full swing. From January 29 to April 15, the Internal Revenue Service (IRS) will be receiving and processing the returns of millions of taxpayers, corresponding to fiscal year 2023.
Mexico is the country that receives the most remittances from the United States on the North American continent, according to data from Statista. As such, the IRS has given a new tax reduction to taxpayers who send money to the neighboring country.
Who is eligible for this benefit, and how does this tax credit work?
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How to get a $500 IRS credit if you send money to Mexico
Taxpayers who have a qualified dependent in Mexico and in Canada, can claim the Child Tax Credit to reduce an average of $500 from their tax return. However, this credit is not refundable; therefore, you can only obtain a reduction in the amount of tax you have to pay and not receive a refund payment as in other credits.
For taxpayers sending remittances to Mexico to be eligible for the tax reduction, they must have provided at least more than 50% of child support, while dependents must have the following eligibility requirements:
- Be a US citizen or resident or have an ITIN number in the US
- Be foreigners residing in Mexico or Canada
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Additionally, the taxpayer must present a passport of the person living abroad, also known as the dependent, as a form of identification. They must also be able to verify the sending of money for the support of the beneficiary.
It is worth noting that children are not the only ones that can be claimed as dependents. Other direct relatives can also fall under this category, such as nieces and nephews, grandchildren, uncles and aunts, as well as grandparents.
For more information, visit the official IRS website or consult your tax professional for more personalized attention.