Refundable Child Tax Credits

US Expats – Are You Claiming All Your Credits?

Starting a family or being blessed with a new addition is always an event to celebrate.

As life changing as it is, having a child brings with it a new adventure.

A life event such as having a child can also have a big impact on your taxes from year to year as the IRS offers certain credits to taxpayers with children.

We all know about the Child Tax Credit and the Refundable Additional Tax Credit portion.

What may not be well known is that US taxpayers living overseas are still entitled to this tax credit and the refundable portion if certain criteria is met.

If you meet the following criteria you may be eligible to claim the non-refundable and/or refundable portion of child tax credit:

  1. Your child must be a US Citizen.
  2. Your child must have a valid Social Security Number valid for Work.
  3. You must have reported income.

Many American Expats living overseas simply opt to DIY their tax returns and select to use the Foreign Earned Income Exclusion to exclude their overseas earnings from US tax.

However, this completely excludes US taxpayers with qualifying children from receiving the credit because they are reporting zero income to the IRS.

So how is this overcome?

Well, if you live in a country with a higher tax rate than the US you might be better off claiming for Foreign Tax Credits.

By doing so you report your income and claim credits paid to an overseas country to reduce or eliminate US taxation giving you the potential to receive all or part of the refundable $1400 tax credit per qualifying child.

S.E. Tax Professionals will always assess what is the best option for our clients and work collaboratively with US taxpayers to put them in the best tax position available.

CLICK HERE to get in touch with an adviser who can discuss some planning opportunities with you and how you could receive a refund on your taxes this year.

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