Unlike the rest of the world, the U.S. Tax Authority, the IRS, requires every citizen to report their income. While the conditions are strict, these come with a series of benefits, such as coronavirus grants, which are currently relevant, study grants, and even children’s grants, which are several times higher than those provided in Israel.
Corona Grants for U.S. Citizens
In March 2020, the U.S. Congress and President Trump passed the COVID-19 Compensation Act – CAERS Act, or in its full name, Coronavirus Aid, Relief, and Economic Security Act
The law has transferred $ 300 billion, which will be given in one-time payments to individual Americans, and billions more that will be passed through various channels of the economy, including the giant companies, local public bodies, and so on.
Under the aforementioned plan, you may also be entitled to receive payments, which are not taxable, that will be transferred or to your American bank account or sent by check to your address.
Those eligible, and those who are not
There are two types of citizens who will receive the compensation money:
- American citizens with Social Security numbers – SSN.
- U.S. residents with a Social Security number – SSN.
On the other hand, there are a number of residents who will not receive compensation:
- ITIN number holders – The ITIN which stands for Individual Taxpayer Identification Number, is given on behalf of the IRS to residents who do not have U.S. citizenship, for tax reports on U.S. income, partnerships in business and property in America, etc.
- Those defined as supported by other people’s tax reports — for example, a resident’s children.
- Supported individuals over the age of 17, which are not included in child tax benefits (as explained below).
The Amount of the Benefit
As a rule, the benefit will be $1,200 per person, depending on the amount of their income and status. In this matter, insofar as a parent of children is concerned, the same parent will receive $500 in grants for each child, insofar as child tax credits are met. We note that each person will be able to receive the allowance, regardless of where they live.
Those eligible for the maximum allowance rate
Single people
They will receive a maximum allowance rate, as much as their income does not exceed $75,000 a year.
Married couples
According to the rate single people receive, a married couple will receive a maximum rate as their joint income does not exceed $150,000.
Head of House
A primary home breadwinner will receive a maximum benefit as his annual income does not exceed $112,500.
Partial Allowance – Offset Rate
The offset rate will be made in accordance with the gap between the actual amount of earnings of the applicant and the amount of earning a maximum refund, multiplied by 5 percent. For example, a single person earning about $80,000 a year will receive a grant from which a total of $250 was offset (5% of the $5,000 gap between $80,000 and $75,000), and therefore, he will receive about $950.
Ineligible
There may also be a number of situations in which, although an American citizen or resident of the United States has an SSN number, his income will exceed those who qualify for compensation, and therefore will not be entitled to compensation for coronavirus damages:
Single people
Single people who make over $99,000 a year will not be entitled to compensation.
Married couples
Couples who earn over $198,000 a year will not be entitled to compensation.
Head of House
A primary home breadwinner who makes over $136,500 a year will not be entitled to compensation.
Scholarship for the American Citizen
All students with U.S. citizenship are entitled to this scholarship, even those living in Israel. The rationale behind this scholarship is the desire to encourage American integration into academies around the world, even if they do not live in the United States.
The rate of the refund provided as part of the benefit is limited to up to $1,000 a year, which will serve the student for a variety of expenses, including tuition, registration fees, book purchases and more.
However, there are a number of criteria in which the student and the school must meet, in order to receive the scholarship:
The School
In order to receive the scholarship, the student must study at one of the following institutions: The Hebrew University, the Technion, Tel Aviv University, Bar Ilan University, Ben-Gurion University, Haifa University, and the Interdisciplinary Center in Herzliya.
Bureaucracy (Israel)
The scholarship applicant must bring from the educational institution a designated form for receiving the benefit, not a standard study certificate.
Volume of revenue
The scholarship will be given to individuals whose annual income does not exceed $90,000, and for couples who do not earn more than $180,000.
Length of benefit
The scholarship will be given for a maximum of four years of study. After that, the applicant will receive tax credit points, without reimbursement for the studies.
Type of degree and scope
The scholarship will be awarded for undergraduate studies only, as the student learns, at a minimum, half a day of study per week.
Criminal record
There are offenses for which the applicant will not receive a scholarship, including drug trafficking.
The Rights of American citizens: Child Benefit
As of 2018, when the amount of the benefit was increased, the US administration provides all citizens, including those living overseas, with child benefits that reach up to $ 1,400 per year, and vary depending on the level of income. This amount, in shekels, is equivalent to 395 shekels a month per child.
In comparison, the child allowance on behalf of the State of Israel ranges from NIS 192-152. This is a pretty significant gap, which indicates the willingness of the American administration to support its residents. It should also be noted that self-employed individuals are not entitled to receive these payments.
The significant change of 2018
It is possible that though you were not entitled to the benefit in the past, today you can receive it, since the Trump administration has applied a number of changes to the arrangement, beyond changing the amount of the benefit.
The fundamental change, in this case, is about the amount of income in order to receive the allowance. While in the past only a couple that earned more than $3,000 a month were eligible for the allowance, today all those who earn more than $2,500 a month will receive the pension.
Retroactive payment and its risk
The law allows receipt of funds up to 3 years back, which are provided automatically. However, if it is discovered that the funds were transferred to you illegally, you will be forced to return it, plus interest, and an additional fine of 25% of the value of the total amount.
Requirements for child allowance
- Submitting annual reports to the IRS.
- The children are U.S. citizens.
- Issuing your children with a Social Security Number (SSN)
In summary
American citizens are entitled to receive various grants, scholarships, and allowances. But along with the rights, there are duties as well. MasAmerica’s team consists of American and Israeli accountants and lawyers who are well versed in all the tricks of the profession and will be happy to assist you in tax planning that will minimize and even nullify your tax liabilities.
