Here’s what happens if you live abroad and want to apply for a CTC subscription

The Child Tax Credit (CTC) helps families lower their U.S. tax bill, even if they live abroad. It’s designed to ease the financial burden of raising kids, covering expenses like food, clothing, school, and childcare. But can expats take advantage of this tax benefit?

What is the Child Tax Credit?

The Child Tax Credit (CTC) helps parents pay less in U.S. taxes. For each child who qualifies, parents can reduce their tax bill by up to $2,000. For example, if a couple has two children who qualify and files their taxes together, they can lower their tax bill by $4,000.

Even if parents don’t owe any taxes, they can still get part of the credit as a refund. This refundable part, called the Additional Child Tax Credit, is $1,600 per child for the 2023 tax year (filed in 2024). For the 2024 tax year (filed in 2025), it will go up to $1,900 per child.

Minimum requirements

So, how can you tell if your child qualifies? In most situations, they need to:

• Be a U.S. citizen.
• Have a Social Security number (SSN) which is still valid at the end of the current tax year.
• Be 16 years old or younger.
• Live with the parent who is claiming the credit for at least 6 months (50% of the year).

The credit decreases for families with higher incomes, so it’s important to know how your income affects your eligibility when filing taxes. You can use IRS Schedule 8812 (Form 1040) to figure out how much you qualify for with the Child Tax Credit (CTC), Credit for Other Dependents (ODC), and Additional Child Tax Credit (ACTC).

Here are the typical guidelines for the annual Child Tax Credit, although the rules underwent some temporary changes in 2021. This was seen as an improvement by many Americans, who saw it as a positive evolution away from the traditional credit system. However, many people are not sure if they are still applicable or not.

Is the 2021 Child Tax Credit still valid?

The increased Child Tax Credit introduced by the American Rescue Plan unfortunately ended in December 2021. Since 2022, the credit has returned to its usual structure.

In March 2021, President Biden approved the American Rescue Plan, a $1.9 trillion stimulus package aimed at addressing the financial challenges brought on by the COVID-19 pandemic. One aspect of this plan included temporary updates to the Child Tax Credit for certain families.

Here’s what changed:

• The maximum age for a qualifying child was raised from 16 to 17.
• The Child Tax Credit amount increased to $3,600 for children aged 0–6 and $3,000 for kids aged 7–17.
• The credit became fully refundable instead of partially refundable.
• Parents could get up to half of their Child Tax Credit early through six monthly payments from July to December 2021.

Can you still claim the Child Tax Credit even if you live outside the U.S.?

Many expats wonder if they’re eligible to claim the Child Tax Credit while living outside the U.S. The good news is that the rules for eligibility remain the same, no matter where you live. However, using the Foreign Earned Income Exclusion (FEIE) could impact your ability to claim the full credit.

If you have children who qualify for it, you can claim the Child Tax Credit –even if you are living as an expat–. But keep in mind that taking the FEIE might reduce or completely eliminate the credit you’re entitled to. It’s essential to understand how the FEIE and the Child Tax Credit work together to ensure you get the most out of your tax benefits.

No matter if you are currently living abroad, as a U.S. citizen you’re still required to file a U.S. tax return if your income meets the minimum filing threshold, even if you pay taxes in the country where you reside. When used correctly, the Child Tax Credit can help lower your overall tax liability.

What if the child is the one living abroad?

It’s clear that American parents living outside the U.S. can often qualify for at least the standard Child Tax Credit. But sometimes the minor is the one living abroad, which makes it an entirely different situation.

If you want to claim the child as a dependant, they have to meet the following criteria:

• They are a close relative: biological child, stepchild, foster child, grandchild, sibling, or even nibling.
• They live with you for more than half the year.
• Contributing less than half of their own financial support.

If these conditions apply to your child who lives abroad, you might still be able to claim the Child Tax Credit on their behalf. If not, the credit won’t be available to you.