The Foreign Service Journal, January-February 2022

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2022 61 note that expenses incurred for the entire home, such as prop- erty taxes, must be prorated based on the percentage of the home used exclusively for the business if you choose the regu- lar (not simplified) calculation. For more information, contact a professional and follow up with IRS Topic 509, Publication 587, the instructions for Form 8829, 1040 Schedule C, and IRC Sec- tions 162, 212, and associated regulations. Three Separate but Related Child & Dependent Credits Child Tax Credit. The American Rescue Plan Act (ARPA) signed into law on March 11, 2021, increased the age allowed to qualify (now up to age 17 as of Dec. 31, 2021); expanded the tax credit per qualifying child; and added a provision to pay one-half of the 2021 expanded portion of the credit monthly through Dec. 31, 2021. The original child tax credit of up to $2,000 for each qualifying child remains, as do the original qualifying thresholds (modified adjusted gross income up to $400,000 if MFJ, or up to $200,000 for all other filing statuses for the maximum $2,000 per qualifying child). ARPA added an additional credit of up to $1,600 per qualifying child ages 5 and under as of Dec. 31, 2021, and up to $1,000 per qualifying child ages 6 through 17 as of Dec. 31, 2021. In addition, ARPA authorized the IRS to pay out one-half of the expanded portion of the child tax credit to qualifying taxpayers as equal monthly payments fromJuly 15, 2021, through Dec. 15, 2021. Only taxpayers who meet the expanded credit’s modified adjusted gross income thresholds (up to $150,000 if MFJ or qualifying widow/er; $112,500 if HOH; or $75,000 if single or MFS) and who have a principal place of abode in the United States (if MFJ, at least one spouse must have a principal place of abode in the United States) for more than one-half of 2021 qualify for the expanded credit. Additionally, the entire child tax credit (the original credit and the expanded credit) is fully refund- able, but only if the taxpayer has a principal place of abode in the United States for more than one-half of 2021. ARPA treats active-duty military members serving the United States abroad as having a principal place of abode in the United States for the purposes of this credit. Cur- rent law does not allow this same treatment for members of the U.S. Foreign Service posted abroad. AFSA has been actively working with Congress to include language in future legislation that will allow members of the U.S. Foreign Ser- vices to qualify as having a United States abode even when posted abroad, but as of press time, AFSA is not certain if this language will ultimately be included in any final legisla- tion affecting 2021 or later year tax returns. Consequently, members of the U.S. Foreign Service who are posted abroad for more than one-half of 2021 may be required to return any