Child and Dependent Care Tax Credit When Living Abroad
Updated on April 02, 2025
Reviewed by
Aya Takriti, an IRS Enrolled Agent with 11 years of expat tax experience, specializes in US tax preparation, tax planning and tax advice for US citizens and Green Card holders living and working in the Middle East. *Schedule a consultation with Aya today.
*30-minutes US$247.
Table of Contents
Can I claim the Child & Dependent Care tax credit when living abroad?
Yes, you can apply and claim for the Child and Dependent Care Tax Credit even if you’re not in the US. As long as you meet the IRS requirements and your foreign-earned income plays a major role in determining your eligibility.
Having a child or dependent living outside the US doesn’t automatically disqualify you from claiming the credit. The IRS recognizes the need for child and dependent care extends beyond US borders.
What truly matters is not just your location but the nature of the care provided and the legal standards in the country where you’re currently living.
Is this different from the Child Tax Credit?
Yes, the Child and Dependent Care Credit and the Child Tax Credit are two separate tax benefits, and it’s easy to mix them up since they have a similar purpose.
The Child Tax Credit (CTC) is designed to help parents with the general cost of raising children. For US expats, you are eligible to claim the refundable portion of the CTC which is the Additional Child Tax Credit. For tax year 2025, the refundable amount would be US$1,700.
There’s no need to have paid for care, and the credit begins to phase out for incomes over US$200,000 for single filers or US$400,000 for joint filers.
On the other hand, the Child and Dependent Care Credit (CDCC) is meant to offset actual out-of-pocket costs you paid for child or dependent care so that you (and your spouse, if filing jointly) could work or look for work.
It’s nonrefundable and applies only if the care was for a child under 13 or a dependent/spouse who is physically or mentally unable to care for themselves.
The good news is that if you qualify, you can claim both credits in the same tax year; they just apply to different needs.
Can I claim the Child and Dependent Care credit?
Here are the eligibility criteria to determine if you’re eligible for the Child and Dependent Care Tax Credit while overseas:
- Both you and your spouse (if filing together) must have earned income, including income earned abroad.
- Generally, married couples must file jointly to qualify, with some exceptions.
- You should have an obligation to file US taxes.
- The dependent must be a child under 13 or a disabled spouse/dependent residing with you for most of the year.
- The cost you incurred should be essential for you (and your spouse if filing together) to work or search for employment.
- The authorized care provider shouldn’t be your spouse, dependent, or your child under age 19.
- The care must align with the legal necessities of your residing country.
Does the FEIE affect my ability to claim the credit?
Yes. If you exclude all of your income under the Foreign Earned Income Exclusion (FEIE), you can’t claim the Child and Dependent Care Credit. You must have taxable earned income to qualify.
The FEIE permits US taxpayers living abroad to exclude specific amounts of foreign income from US taxation. It’s best to keep in mind that, depending on your circumstances, this may diminish or even nullify your qualification for the Child and Dependent Care Tax Credit.
Can I use foreign care providers?
Yes, you can use foreign care providers as long as they aren’t disqualified persons such as your spouse or an older child. It could be a daycare facility in Sydney or a nanny in London, as long as they qualify as a care provider for the child and dependent care tax credit.
The primary concern is that the care aligns with the IRS’s standards for this credit. Proper documentation and compliance with particular IRS directives, such as managing currency conversion and necessary supporting paperwork, are essential.
Want to know what other tax credits you can claim? Let a tax expert check it.
What are the qualifications of an authorized care provider?
Here is a checklist on who qualifies as a care provider for the child and dependent care tax credit:
- An individual (like a nanny, babysitter, or relative who isn’t disqualified)
- A daycare center or nursery school
- A summer day camp (overnight camps don’t qualify)
- A household employee hired to care for your child/dependent in your foreign home
- After-school care programs
The key is that they must be providing care so you can work or look for work. If they don’t have a US Taxpayer Identification Number (TIN), you can write “Foreign Provider” on Form 2441, along with their name and address.
Are there income limits on claiming the credit?
Technically, there is no income limit that completely disqualifies you from claiming the Child and Dependent Care Credit, but your income does affect how much credit you can get.
How much credit can I claim?
For tax year 2025, the maximum amount you can claim for this credit is US$4,000 for one qualifying person and US$8,000 for two or more.
Depending on your income, this could mean 20% to 35% of your qualifying expenses. The child and dependent care tax credit will be calculated depending on factors that influence the amount of credit a taxpayer can claim.
Here is how the credit is calculated:
If your adjusted gross income (AGI) is US$15,000, then you are under the 35% rate and could claim US$1,050 per dependent or US$2,100 for two children.
What are the qualifying expenses for the credit?
The qualifying expenses you should include must be directly related to the care of your child or dependent. Here are some examples of expenses that qualify for the credit:
Childcare expenses
- Nanny or babysitter (including in-home care)
- Licensed daycare center or nursery school
- Before- and after-school programs
- Day camps (but not overnight camps)
Household expenses (if part of care)
- A housekeeper or maid whose duties include caring for the child
- Cook, cleaner, or driver, if care-related
How can I claim the child and dependent care credit?
Here is the process for claiming the child and dependent care tax credit:
- Gather the right info: Basic information about your provider, the amount you paid for care (already converted to US dollars), and documentation provided for your work.
- Complete IRS Form 2441: You must fill out Form 2441: Child and Dependent Care Expenses and attach it to your Form 1040 (or 1040-SR).
- Make sure you have earned income: To qualify, you (and your spouse, if filing jointly) must have earned income during the year.
- Claim the credit when you file: The credit amount will appear on your Form 1040, Line 20, and the credit reduces the amount of tax you owe, but it’s nonrefundable
