In just a few days, tax season in the United States begins (it will last until April, as it does every year) and one question that haunts those Americans who live abroad is whether or not they can access the Child Tax Credit (CTC). Living abroad can be a lot of fun, but it is also very challenging when it comes to tax issues. In this United States system, for many families who reside outside the country, this credit not only represents a relief but also a way to feel connected to the benefits of American citizenship! So, if you have ever wondered if you can access this benefit while enjoying your life abroad, here we are going to give you all the information to make the decision that you think is appropriate to ensure your well-being and that of your family!
What is the Child Tax Credit?
Well, this is a tax benefit that is designed to make raising our children not an economic burden for the rest of the family, so the Administration offers families with children under 17 years of age a credit that allows them to reduce the total amount of taxes owed (and, in some cases, even a direct refund if this payment is greater than the taxes owed). So, the CTC seeks to help American households so that their children grow up in full economic stability. For this 2025, the CTC will be the same as in previous years (something that we cannot guarantee for subsequent years) and will consist of up to $2,000 (of which $1,700 will be refundable!)
Can I claim the child tax credit if I live abroad?
This is the question that matters to us and the answer is yes, it is possible. This is because the eligibility rules do not change, only the place where the individual lives. Although they must keep in mind that they have to request the Foreign Earned Income Exclusion (FEIE), so it would be enough to meet the age, relationship and income requirements to claim this credit.
What are the criteria for the CTC?
Below we will tell you what the criteria are to access this payment.
- This credit is available to those families with dependent children, that is, who have never worked (or have not filed their own income tax return other than to access certain tax benefits) under 17 years of age who request it. However, the maximum amounts must be met: $2,000 for each eligible child and $1,700 as the portion that can be refunded.
- As for income limits, those established by the IRS are as follows: $400,000 for married taxpayers filing a joint return or $200,000 for single filers or any other filing status.
- In addition, this credit can be used both as a refund and to reduce the taxpayer’s tax bills.
What about the EFIE?
The Foreign Earned Income Exclusion may limit the refundable portion because it reduces your adjusted gross income, so it will most likely directly affect your credit calculations. If you want to maximize the benefits of this credit, you can waive the EFIE and claim your full CTC, thereby getting the refundable portion while reducing your outstanding tax balance.
How do I apply for the CTC from abroad?
It doesn’t matter if you live in the U.S. or abroad, your tax return will have to go through the IRS, so when you do so you will need to include Form 1040 or 1040-R, so that you can add the additional information required for this form, and Form 2555 for the FEIE (if applicable). Remember that the deadline to file your taxes is April 15, but citizens residing abroad can obtain an automatic extension until June 15.
What are the requirements for children?
It doesn’t matter if they are a brother, son, stepson, half-son, nephew or grandson, they must be related in some way to the person filing the tax return. In addition to this, they must be under 17 years old in the fiscal year in which the benefit is requested and have their own Social Security number. These are the three basic points that the IRS asks for in order to request the CTC, so if you qualify for this payment, it won’t matter where you live, because this money belongs to you!