Am I able to claim the child tax credit if I earn income outside of the United States?
Yes, but the nonrefundable and refundable portion of the child tax credit can be applied differently. If you claim the foreign earned income exclusion, you will not be able to claim the refundable portion of the child tax credit while living abroad. This means the child tax credit by itself will not lead to a refund on your return.
However, when you are living abroad the nonrefundable portion of the child tax credit would still be available to lower the tax you owe on your U.S. federal tax return. The rules around the child tax credit afford you the ability to claim up to a $1,000 credit per qualifying child, increasing to $2,000 on your 2018 tax return through 2025.
If the foreign income exclusion is not claimed, and for instance you claim the foreign tax credit instead, then the child tax credit may still lead to a refund. The refundable portion of the credit increases from $1,000 to $1,400 until 2025.
Under the 2017 Tax Cuts and Jobs Act (TCJA), taxpayers can’t claim a child tax credit for a child who does not have a Social Security Number (SSN) by the due date of the return.
The TCJA does allow a new $500 nonrefundable credit for dependents who do not qualify for the child tax credit. Taxpayers can claim this credit for children who are too old for the child tax credit, as well as for non-child dependents. There is no SSN requirement to claim this credit, so taxpayers can claim the credit for children with an Individual Tax Identification Number (ITIN) or an Adoption Tax Identification Number (ATIN) if they otherwise qualify.
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