Am I Eligible for the Child Tax Credit While Living Abroad?
If eligible, a taxpayer can receive a $1,000 credit for each qualifying child. This credit can be claimed even if the taxpayer does not owe any money. This means the IRS may send you a check for $1000 even if you do not owe any taxes. And it is possible to receive this check while living abroad.
In order to claim the credit, the child must be a qualifying child. This means that the child is under the age of 17, and meets the six tests to qualify. These tests are the age test, relationship test, support test, dependent test, citizenship test, and residence test.
Age Test – To pass the age test the taxpayer my be under the age of 17.
Relationship test – This test that the taxpayer must be the taxpayer’s son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of these individuals. An adopted child has the status as a child of the taxpayer.
Support test – The child must not have provided more than half of their own support.
Dependant Test – The child must be claimed as a dependant on the taxpayer’s tax return.
Citizenship Test – This category is important for an expat taxpayer. The child must be a US citizen, national or resident alien and the child have an eligible social security number or TIN (Taxpayer Identification Number).
Residency Test – Child must have lived with the taxpayer for more than half of the year.
The credit is limited if your income is above or below certain amounts. If your income is too high it is possible that you will not receive the credit.
However, more important for expat taxpayers, is that you will not receive the credit if your adjusted gross income is too low. Therefore, if an expat taxpayer uses the Foreign Earned Income Exclusion, and has no or low gross income, then it is possible that the taxpayer may not be eligible the Child Tax Credit. This may be a reason to use the Foreign Tax Credit, as opposed to the Foreign Earned Income Exclusion. Discuss the specifics with your tax professional to determine if you are eligible for the Child Tax Credit.