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us expat tax guide – france

What is the Additional Child Tax Credit, and who is eligible?

The Additional Child Tax Credit (ACTC) is a refundable credit that benefits American parents living abroad, including those in France. It is designed for parents who have US citizen or green card holder children under 17 years old with a Social Security number.

Eligibility for this credit does not depend on US income; earnings in France also qualify. For the tax year 2023, the credit amount is US$1,600 per child, and for 2024, it has increased to US$1,700.

What are the income requirements to claim the Additional Child Tax Credit refund?

To be eligible for the refundable Child Tax Credit of US$1,700 per child for the 2024 tax year, you must earn a minimum Modified Adjusted Gross Income (MAGI). Specifically, you need to earn at least $2,500 to start qualifying. From there, 15% of your earnings above US$2,500 are considered when calculating your potential refund amount, up to the maximum refundable amount per child.

Example with One Qualifying Child

If your MAGI in 2024 is US$15,000, the calculation would subtract the $2,500 threshold, leaving US$12,500 eligible for consideration. From this amount, 15% is taken, equating to US$1,875.

Since the refundable Child Tax Credit limit is US$1,700 per child in 2024, in this scenario, you could claim the full US$1,700 for one child on your tax return because the calculated amount (US$1,875) exceeds the maximum refundable limit per child.

What If You Have Two Qualifying Children?

If you have two children, the combined refundable credit you could claim would still be determined by the 15% of your remaining MAGI after subtracting the US$2,500 threshold. 

However, each child would qualify for up to US$1,700. So, if the calculation yields less than the sum total for two children (US$3,400), you can only claim the calculated amount (in this example, US$1,875 for two children, not US$3,400).

Can you still receive the ACTC with only foreign income and no US tax liability?

Yes, American expatriates living in France who earn only local income and pay taxes there can still benefit from the ACTC. The credit is refundable, which means it can result in a payment from the IRS even if you have no US tax liability. This aspect often surprises many because it seems like getting money from the US government without paying US taxes directly.

How does the ACTC work if you’re employed or self-employed in France?

If you work in France, whether as an employee or self-employed, your earnings count towards qualifying for the ACTC. The crucial factor is not where the income comes from but whether you meet the other eligibility criteria, such as income level, child’s age, and having a valid Social Security number for your child.

Is it additional cash in your pocket?

Technically, yes. The ACTC is not just a reduction in tax liability but actual money that can be deposited into your bank account. This refundable credit results in real financial benefits, contrary to some misunderstandings that say it might only be a potential tax offset.

What do you need to do to claim the ACTC?

You must file a US tax return to claim the Additional Child Tax Credit, ensuring all required forms and documentation are properly completed. Aside from standard tax preparation fees, claiming this credit does not incur additional costs if applicable. 

This makes it a valuable option for American expatriates with children to potentially receive financial benefits from the IRS each year. This credit is a significant yet often overlooked opportunity for Americans abroad to receive financial support from the US government.

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