Yes. US citizens living abroad can indeed claim the Child Tax Credit—but there are important distinctions to understand. While expats may not receive the full Child Tax Credit benefit, they are eligible for the refundable portion, known as the Additional Child Tax Credit.
This distinction often surprises US expat families who are unaware they can still claim money from the IRS, even while living outside the United States. Here’s everything US expats need to know about claiming the Child Tax Credit while living overseas.
Key takeaways:
- U.S. expats qualify for the refundable ACTC ($1,700 per child in 2025).
- FEIE excludes you from ACTC eligibility; switching to FTC may make you eligible.
- ACTC can be significant financial relief—up to $1,700 per child directly refunded, even without owing U.S. taxes.
What is the Child Tax Credit (CTC)?
The Child Tax Credit is a is a partially refundable credit designed to financially support families by reducing their tax liability. Simply put, this credit decreases the amount of taxes a family owes dollar-for-dollar. It directly lowers the amount you must pay to the IRS.
For example, if your tax bill is $4,000, and you qualify for a Child Tax Credit of $2,000, your final tax liability becomes just $2,000. This provides immediate financial relief to many American families, allowing them to keep more of their hard-earned money.
How Much is the Child Tax Credit?
For the tax years 2024 and 2025, the maximum Child Tax Credit for each qualifying child is set at $2,000. However, it’s essential to understand that the total credit is divided into two parts:
- Non-refundable portion: Up to $300 per child (which only reduces taxes owed).
- Refundable portion (ACTC): Up to $1,700 per child, which can be refunded directly to taxpayers even if they don’t owe taxes.
This refundable portion is officially called the Additional Child Tax Credit, and it’s particularly relevant for U.S. expats.
Why Do U.S. Expats Only Qualify for the Refundable Part?
The standard Child Tax Credit aims primarily to lower taxes owed. But here’s the catch: many expats pay little or no U.S. taxes due to two special provisions:
- Foreign Earned Income Exclusion (FEIE): Allows expats to exclude up to around $120,000 of foreign earned income from their taxable income.
- Foreign Tax Credit (FTC): Allows expats to offset U.S. tax liability by the amount of taxes paid to a foreign country.
Due to these provisions, most U.S. expats typically have minimal or no remaining U.S. tax liability. Since the main purpose of the standard CTC is reducing a tax liability, expats usually don’t benefit from the non-refundable portion.
However, U.S. expats can still claim the refundable portion—the ACTC—which provides a direct payment (refund) to families even if they owe no taxes.
How Much Can Expats Claim with the Additional Child Tax Credit?
For 2025, expat families can claim up to $1,700 per qualifying child through the ACTC. Unlike the standard credit, the ACTC is directly refundable, meaning expats can receive this amount as a direct refund from the IRS even if their U.S. tax liability is zero.
In practical terms, if you’re a U.S. citizen living abroad with two eligible children, you could receive up to $3,400 directly from the U.S. government as a tax refund—even though you owe no taxes.
Who is a Qualifying Child?
To qualify for the ACTC, your children must meet certain conditions:
- Be your own child, stepchild, foster child, sibling, step-sibling, or descendant of any of them.
- Be under the age of 17 by December 31 of the tax year.
- Have lived with you for more than half of the tax year (exceptions for temporary absences apply, such as attending school).
- Have a valid Social Security Number (SSN) issued before the tax filing due date.
- Be claimed as a dependent on your U.S. tax return.
- Be a U.S. citizen, national, or resident alien.
Filing a joint return can impact your eligibility for the Child Tax Credit, as the income threshold for qualifying for the full credit is $400,000 for those filing a joint return.
How is the ACTC Calculated for Expats?
To claim the ACTC, you must have earned income—wages or self-employment income—reported on your U.S. tax return. Importantly, income excluded by the Foreign Earned Income Exclusion (FEIE) does not count towards ACTC eligibility. If your income is entirely excluded by FEIE, you won’t qualify. You must instead use the FTC method, claiming foreign taxes paid, rather than excluding your income through FEIE.
This step is critical and frequently overlooked by expats. If you’re relying solely on FEIE, consider whether switching methods may benefit you to become eligible for the ACTC.
Practical Example:
- Let’s say you’re an American expat living in Canada with an annual income of $50,000 USD from employment.
- If you use FEIE, your taxable earned income drops to $0, meaning you won’t qualify for the ACTC.
- However, if you use the FTC instead, you report the full $50,000 earned income on your U.S. tax return, offsetting your U.S. tax liability by claiming taxes paid to Canada. Although your U.S. tax liability remains at $0 due to FTC, your earned income is now recognized, qualifying you to claim the ACTC of up to $1,700 per child.
This minor change in reporting can make a significant difference in your family benefit from the IRS.
How to Claim the Additional Child Tax Credit on Your Tax Return?
To claim the Additional Child Tax Credit, US expat families must file IRS Form 8812 alongside their standard tax return. This form calculates eligibility based on the taxpayer’s earned income, the number of eligible children, and other criteria as outlined above.
It’s critical to maintain accurate records, including Social Security numbers, proof of residency, and employment documentation, as this helps avoid issues or potential fraud concerns when claiming the credit.
Contact us for free tax advice
At 1040 Abroad, we’ve helped tens of expat families each year recover significant amounts in tax refunds simply by properly claiming this credit. If you’re uncertain about your eligibility or how to claim this benefit, don’t hesitate to contact us for assistance.
Make sure you’re getting the maximum benefit available—your family deserves it.
