How American Expats Can Receive the Child Tax Credit and Additional Child Tax Credit Overseas
Raising kids is one of life’s greatest rewards but yes, let’s be realistic, it’s expensive. For Americans abroad, parenting can even seem more pricey, with two-country concerns such as education, medical care, and traveling. It is for this reason that knowing your status for the Child Tax Credit (CTC) and the Additional Child Tax Credit (ACTC) can be a real money-saver.
Most U.S. expat parents aren’t aware that they might still be eligible for tax credits despite living outside the U.S. for years. And in some instances, you could be eligible for a refund of up to $1,600 per child even if you owe no U.S. tax whatsoever.
What is the Child Tax Credit?
The Child Tax Credit is an incentive paid by the U.S. government that assists families with the expense of raising children. For tax year 2025, you can claim up to $2,000 per qualifying child under age 17.
Up to $1,600 of that amount may be refundable, this portion is called the Additional Child Tax Credit (ACTC)
Even if your U.S. tax bill is zero, the refundable part means the IRS could send you money back, as long as you meet the eligibility rules.
Can Expats Claim the Child Tax Credit?
Yes, Americans abroad can take the Child Tax Credit and the Additional Child Tax Credit—but with some special requirements.
To qualify for the CTC and ACTC while abroad, you must:
- File a U.S. tax return (Form 1040)
- Have an eligible child who is a U.S. citizen or resident with a valid Social Security Number (SSN)
- Have at least $2,500 of earned income
- Make sure the child resided with you for over half the year
Do not claim the Foreign Earned Income Exclusion (Form 2555) if you would like the refundable part (ACTC)
How the Additional Child Tax Credit Affects Expats
Most expats earn a good income outside of the United States, pay foreign taxes, and owe nothing to the IRS. But here’s the catch: if you don’t owe U.S. tax but earn over the threshold of U.S. earned income, you could still get the Additional Child Tax Credit as a refund, direct-deposited into your U.S. bank account or sent to you.
Example
Emily, an Australian resident and U.S. citizen, has two children under the age of 17. She is employed locally, earns around AUD $70,000, and files taxes in Australia. Rather than excluding her income using Form 2555, she applies Form 1116 (Foreign Tax Credit) to claim a reduction in U.S. tax.
Her tax is $0, but since she qualifies on all CTC requirements, earned income and valid SSNs for the children, she gets a refund of $3,200.
Common Errors That Will Cost You the Refund
Numerous American expat parents are losing out on this credit because of easy but critical mistakes. Following are the largest ones to avoid:
1. Claiming the Foreign Earned Income Exclusion
Taking the foreign income exclusion on Form 2555 seems like a good idea, but it excludes you from claiming the refundable part of the credit.
Instead: Claim the Foreign Tax Credit using Form 1116. It lowers your tax liability but does not keep you from claiming the ACTC.
2. Lack of Valid SSN for Child
To be eligible, your child needs to have a valid Social Security Number issued prior to the deadline for filing. ITINs are not included.
Tip: Apply at the U.S. Embassy or Consulate overseas. This may be a slow process, so begin several months prior to tax time.
3. Believing You Don’t Have to File
Some expats believe that if they owe nothing, they don’t have to file. But the IRS won’t issue Child Tax Credit refunds unless you file a return.
You are required to file Form 1040, even if your earnings are completely taxed in your new nation.
What is “Earned Income”?
To qualify for the Additional Child Tax Credit refund, you must have at least $2,500 of earned income. Included are:
- Salaries and wages
- Self-employment income
- Foreign earned income (provided you don’t exclude it)
- Interest, dividend, or capital gain income that is passively earned does not apply towards this obligation.
Documentation Required
In order to substantiate your claim and prevent your refund from being delayed, have the following available:
- Your child’s Social Security Number
- Documentation demonstrating your child resided with you (school registration, medical records)
- Your foreign income records (e.g., pay stubs, employer letter)
- Copies of prior returns if you’re amending for missed credits
Conclusion
If you’re an American expat parent, the Additional Child Tax Credit and Child Tax Credit can be true money-savers. But unlike some other tax credits available overseas, the IRS doesn’t automatically apply this one. You’ll need to file properly, qualify under the rules, and steer clear of avoidable mistakes, particularly when it comes to excluding income or relying on stale paperwork.
No matter where you are in Sydney, London, or Berlin, don’t miss out on a refund that can offset all those school fees, childcare, or just ease your savings. If you are not sure how to file or what forms to use, we suggest using a U.S. tax adviser who works with expats.
Your children are worth the best, and that includes the tax credits you are legally allowed to claim.
FAQs: Child Tax Credit and ACTC for Expats
Can I receive the Child Tax Credit if my child was born abroad?
Yes, if your child is a U.S. citizen with a valid Social Security Number.
How does the Child Tax Credit differ from Additional Child Tax Credit?
The Child Tax Credit lowers your tax. The Additional Child Tax Credit is the refundable amount, so you receive money back even if you don’t owe anything.
Do I still qualify if I reside in a high-tax nation like Germany or Australia?
Yes. But you will have to apply the Foreign Tax Credit (Form 1116) instead of excluding your income with Form 2555 if you desire the refund.
Can I file an amended return to claim forgotten credits?
Of course. You usually have three years from the initial filing date to amend a return and claim the CTC/ACTC.
How quickly does it take to get the refund?
It can take 4 to 8 weeks if you e-file and enter valid bank information. Paper returns or overseas mailing takes several months.
