Child Tax Credit 2025
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Table of Contents
Child Tax Credit 2025: what parents need to know
Trump’s Big Beautiful Bill
For the 2025 tax year, the Child Tax Credit (CTC) was US$2,000 per child under age 17, with up to US$1,700 refundable via the Additional Child Tax Credit (ACTC). But there’s a boost to US$2,200 per child under the “Big Beautiful Bill”.
How the Child Tax Credit works for US expat families in 2025
US expat parents can still claim the CTC, even if they live overseas. The IRS treats citizens and resident aliens the same, regardless of where they live.
Here’s the breakdown for 2025:
- Base credit: US$2,200 per qualifying child under age 17.
- Refundable portion (ACTC): Up to US$1,700 if the credit exceeds your tax liability. This is the part you can actually get back in cash.
- Eligibility: Children must have a valid Social Security number, live with you for more than half the year, and be claimed as dependents.
Expats should also watch out for how claiming the Foreign Earned Income Exclusion (FEIE) can affect their refundable credit eligibility (more on that in a moment).
Income limits, phase-outs, and filing thresholds for expat taxpayers
What are the income limits for full CTC?
- Full credit phases out starting at US$200,000 for single filers.
- For married filing jointly, it starts at US$400,000.
- Above those levels, the credit drops by US$50 for every US$1,000 of extra income.
How does the refundable portion work?
To get the US$1,700 ACTC, you need at least US$2,500 of earned income. Earned income includes wages, salaries, and self-employment, not passive income like interest or dividends.
The refundable portion is calculated at 15% of your income over US$2,500, up to US$1,700 per child.
What if you use the FEIE?
Claiming the FEIE excludes earned income from US taxation, possibly moving your income below the US$2,500 threshold needed for the refundable credit. That means you’d lose your ACTC, even if you’d otherwise qualify.
Example scenario:
You and your spouse file jointly, live in Germany, and earn US$60,000 each from overseas jobs. You have two kids. If you don’t use the FEIE, you could claim US$4,400 in CTC, with up to US$3,400 refundable (2 x US$1,700).
But if you exclude all income using the FEIE, you won’t qualify for any of the refundable credit even though you still get the non-refundable portion to zero out your tax.
What makes the Additional Child Tax Credit different from the standard Child Tax Credit?
The regular Child Tax Credit (CTC) gives you up to US$2,200 per qualifying child under 17. That credit lowers your tax bill but doesn’t pay you cash if you don’t owe taxes.
The Additional Child Tax Credit (ACTC) is different; it’s refundable, meaning you can get up to US$1,700 per child back even if your tax bill drops to zero. That refund is based on your earned income and can be used by many US expats who often have low or no US tax liability.
Calculate how much Child Tax Credit refund you can claim with our calculator.
How US expats can claim the ACTC: step-by-step guidance
Step 1: Gather your forms
- Form 1040: Your US tax return
- Schedule 8812: Used to claim both the regular CTC and the refundable ACTC
Step 2: Prepare key documents
- Proof of earned income (pay stubs, self-employment records)
- Proof of residency/family relationship – documents showing the child lived with you more than half the year
- Valid Social Security Numbers (SSNs) for each child. ITINs won’t work
Step 3: Meet income requirements
- You need at least US$2,500 of earned income (wages, self-employment), passive income doesn’t count.
Step 4: File early
- File your return as early as possible. US expats often get delayed IRS processing, and early filing with direct deposit helps you receive refunds faster.
Common pitfalls for expat families and how to avoid them
Using the FEIE without thinking about ACTC eligibility
The Foreign Earned Income Exclusion (FEIE) lets you exclude up to about US$130,000 of foreign-earned income. That sounds amazing, but it has a catch.
If you exclude all your income, your taxable earned income drops to zero—and you won’t meet the US$2,500 earned income threshold needed to claim the refundable ACTC. You’re still eligible for the non‑refundable credit, but you lose out on getting cash back. If that refund matters, consider using the Foreign Tax Credit (FTC) instead, as it doesn’t affect your earned income calculation.
Children who don’t have valid Social Security numbers
It’s easy to let this slip while abroad, but every child you’re claiming must have a valid SSN issued before you file. Individual Taxpayer Identification Numbers (ITINs) won’t cut it here. Make sure your kids have SSNs early, it’s worth starting the process several months before you file.
Filing late and delaying your refund
Expat parents get an automatic extension to June 15, but there’s a trade-off. The IRS holds refunds involving the ACTC until around mid-February to check for fraud. If you file late, you push that refund even further out, and sometimes face extra verification steps.
Assuming you can skip Form 1040 if you owe no tax
A lot of expats figure that if they exclude foreign income and owe nothing, they don’t need to file a return. That’s not true. You must file Form 1040 and attach Schedule 8812 to claim either CTC or ACTC. Without that, the IRS won’t send your refund even if you’re entitled to it.
Mixing up earned and passive income
Only earned income (like wages and self-employment) counts toward the refundable ACTC. Passive income, such as interest, dividends, and capital gains, doesn’t count. So if your money comes mostly from investments or rental property, you might qualify for the non-refundable CTC but not the ACTC refund.
Overlooking income thresholds and phase-outs
The CTC starts to phase out when your income hits US$200,000 (single) or US$400,000 (joint). Above those levels, you lose US$50 in credit for every US$1,000 over the threshold.
FAQs
Can US expats claim the Child Tax Credit if their kids live abroad?
Yes. As long as your child has a valid Social Security number and meets IRS residency and relationship rules, you can claim the credit even if you live overseas.
Does claiming the Foreign Earned Income Exclusion disqualify you from the refundable Child Tax Credit?
Can I get the Child Tax Credit if my child has an ITIN?
Do US expats get the same Child Tax Credit as people in the US?
What happens if I file late as an expat claiming the Child Tax Credit?
