2026 amounts and thresholds
| Item | Amount | Notes |
|---|---|---|
| Child Tax Credit (CTC), per child under 17 | $2,200 for 2025; indexed for inflation from 2026 | Made permanent and raised by the 2025 budget law. Check the current year’s Schedule 8812 instructions for the indexed figure. |
| Refundable portion (ACTC) | Up to $1,700 per child (indexed) | 15% of earned income above $2,500, capped at the per-child maximum. Earned income means wages or self-employment income that is not excluded under the FEIE. |
| Credit for Other Dependents (ODC) | $500 per dependent, non-refundable | For children 17 and over, children with only an ITIN, and other qualifying relatives who are U.S. citizens, nationals, or residents. |
| Phase-out begins | $200,000 single / $400,000 married filing jointly (modified AGI) | Reduced by $50 per $1,000 above the threshold. Not indexed. |
| SSN requirement | Child: SSN valid for employment, issued before the return due date. Taxpayer: at least one spouse on a joint return must have an SSN | The taxpayer-SSN rule took effect for 2025 returns. A parent with only an ITIN cannot claim the CTC unless married to an SSN-holder and filing jointly. |
Which children qualify from abroad
The tests are the same as for a family in Ohio, but three of them bite harder overseas:
- Citizenship or residence. The child must be a U.S. citizen, U.S. national, or U.S. resident alien. A child born abroad to a U.S.-citizen parent is usually a citizen at birth if the parent meets the physical-presence transmission rule (for a child born to one citizen parent and one foreign parent, the citizen parent generally needs five years of U.S. presence before the birth, at least two of them after age 14). Document it with a Consular Report of Birth Abroad (CRBA) and then get the SSN through the embassy’s Federal Benefits Unit. A foreign-born stepchild who is not a citizen or resident does not qualify — and cannot be claimed as a dependent at all unless resident in the U.S., Canada, or Mexico. See claiming a Filipino stepchild.
- Social Security number. The child needs an SSN valid for employment, issued before the due date of the return (including extensions). An ITIN or an SSN marked “not valid for employment” gets you only the $500 ODC. Expat parents routinely delay the embassy SSN appointment for a year or two and lose a full credit each year they do.
- Residency with you. The child must live with you for more than half the year. Boarding school, a long stay with grandparents, or a custody split across two countries can fail this. Temporary absences for school, medical care, or vacation count as living with you.
- Age, support, relationship, and dependent status — under 17 at year-end, not providing more than half their own support, your son, daughter, stepchild, foster child, sibling, or a descendant of any of them, and claimed as your dependent.
The FEIE trap: why Form 2555 kills the refund
The CTC has two halves. The non-refundable half reduces your U.S. income tax, dollar for dollar, to zero. The refundable half — the ACTC — pays you the remainder as a refund, up to $1,700 per child, as long as you have enough earned income.
Two rules combine to defeat most expats:
- If your U.S. tax is already zero after the FEIE, the non-refundable half is wasted. A credit cannot take tax below zero. A teacher in Bangkok earning $48,000, all excluded on Form 2555, owes no U.S. tax, so the $2,200 non-refundable credit does nothing.
- The ACTC is expressly denied to anyone who files Form 2555. Schedule 8812 asks whether you are excluding income under the FEIE or the foreign housing exclusion; if yes, the refundable credit is zero. Not reduced — zero, for every child.
So the expat who takes the FEIE gets nothing from the CTC in most cases. The expat who uses the Foreign Tax Credit instead reports the full salary, uses the credit for foreign tax paid to bring U.S. tax down, and then claims the CTC against whatever tax remains — and can claim the refundable ACTC on the earned income that was never excluded.
Worked example: FEIE vs FTC for a family of four
An American engineer in Germany earns the equivalent of $95,000, pays about $22,000 in German income tax, is married to a German citizen (no U.S. status, files MFS with “NRA”), and has two U.S.-citizen children with SSNs.
| FEIE (Form 2555) | FTC (Form 1116) | |
|---|---|---|
| Income reported | $95,000 excluded; U.S. taxable income $0 | $95,000 reported; taxable after standard deduction ~$78,900 |
| U.S. tax before credits | $0 | ~$12,000 (2026 MFS brackets, approximate) |
| Foreign tax credit | n/a | Up to the U.S. tax on the foreign income — the full ~$12,000 is wiped out by the $22,000 German tax; the excess carries forward 10 years |
| Non-refundable CTC ($4,400) | Nothing to offset | Nothing left to offset after the FTC (the FTC is applied first) |
| Refundable ACTC | $0 — barred | $3,400 refund (2 × $1,700; earned income is well above the threshold) |
| Net result | $0 | $3,400 paid to the family, every year |
The same family in a low-tax or no-tax country — the UAE, Qatar, Singapore at low income, or the Philippines with a local employer under a lenient regime — gets a different answer. With little or no foreign tax to credit, the FTC route leaves real U.S. tax owed, and the $4,400 non-refundable credit plus the $3,400 refund may or may not beat the tax the FEIE would have saved. Run both with the FEIE vs FTC calculator, then add the children by hand.
If you have claimed the FEIE in a prior year and stop, you have revoked it and cannot claim it again for five tax years without IRS consent. For a family that expects to stay in a high-tax country, that is fine. For a family that may move from Germany to Dubai in two years, the revocation can cost far more than the ACTC. Model the next five years, not just this one.
Self-employed parents abroad
Self-employment income counts as earned income for the ACTC, but only the part not excluded under the FEIE. A freelancer in Mexico who excludes $60,000 of net self-employment income has $0 earned income for Schedule 8812 purposes and no refund. Note that the FEIE never removes self-employment tax; a self-employed expat in a country with no totalization agreement already owes 15.3% SE tax on the full net profit, which changes the arithmetic: the non-refundable CTC cannot reduce SE tax (it offsets income tax only), but the refundable ACTC is computed independently and simply nets against the SE tax owed on the same return. A freelancer with two children who owes $8,000 of SE tax and qualifies for $3,400 of ACTC pays $4,600 — if the income was not excluded. Exclude it with the FEIE and the SE tax is still $8,000 with no credit against it.
Getting the SSN for a child born abroad
- Apply for the Consular Report of Birth Abroad at the embassy or consulate, with proof of the citizen parent’s U.S. physical presence (school transcripts, tax returns, employment records, passport stamps).
- Apply for the child’s U.S. passport at the same appointment.
- Apply for the Social Security number through the Federal Benefits Unit — in many posts this is a separate application (form SS-5-FS) by mail or appointment, taking two to four months. The SSN must be issued before your return’s due date, so file for the extension if you are waiting.
- In the meantime, the child can be listed with an ITIN only for the $500 ODC — and once the SSN arrives, you may amend prior-year returns to claim the full credit only if the SSN was issued before that year’s due date. In practice: get the SSN early.
Mixed-status families: common scenarios
| Scenario | CTC? | What applies |
|---|---|---|
| U.S.-citizen child with SSN, living with you abroad | Yes | Full CTC / ACTC subject to the FEIE rule above |
| U.S.-citizen child, SSN application pending at year-end | Only if issued before the return due date | Extend the return; otherwise $500 ODC with an ITIN |
| Child born abroad, parent did not meet transmission rule (not a citizen) | No, unless the child is a U.S. resident | Consider naturalisation routes; no credit meanwhile unless the child lives in the U.S. |
| Foreign stepchild living with you abroad, not a citizen or resident | No | Not a dependent for U.S. purposes; see the stepchild guide |
| Child of a green card holder, child has a green card | Yes, if the child is a resident alien and has an SSN | Long absences can affect both the child’s residency and the parent’s; see green card holders abroad |
| Child 17 or older at year-end | No | $500 ODC if still a dependent |
Mistakes that cost families the credit
- Claiming the FEIE on autopilot because “that is what expats do,” without noticing the ACTC line on Schedule 8812 is zero.
- Waiting on the child’s SSN past the return due date.
- Claiming a non-citizen stepchild who lives abroad.
- Filing MFJ without the 6013(g) election to reach the $400,000 phase-out — the joint return is invalid.
- Revoking the FEIE for one year’s refund and getting locked out for five.
- Not filing at all because no tax is owed. The ACTC is a refund; you must file to get it, and you can go back three years to claim it on late or amended returns if the SSN and other tests were met for those years.
Frequently asked questions
Can U.S. expats claim the Child Tax Credit?
Yes. Living abroad does not disqualify you. The child must be under 17, a U.S. citizen or resident, live with you more than half the year, and have a Social Security number valid for employment. The refundable part is denied if you exclude income under the Foreign Earned Income Exclusion.
Why is my Additional Child Tax Credit zero on Schedule 8812?
Almost certainly because you filed Form 2555. Anyone excluding income under the FEIE or the foreign housing exclusion is barred from the refundable Additional Child Tax Credit for that year. Using the Foreign Tax Credit instead usually restores it.
My child was born abroad and has no Social Security number yet. Can I still claim the credit?
Only the $500 Credit for Other Dependents, using an ITIN, until the SSN is issued. The SSN must be issued before the return due date, including extensions, for the full credit, so apply through the embassy’s Federal Benefits Unit as early as possible and extend the return if needed.
Can I claim my foreign stepchild who lives with us abroad?
Not unless the stepchild is a U.S. citizen, U.S. national, or U.S. resident alien, or a resident of Canada or Mexico. A Filipino, Thai, or Mexican-resident-abroad stepchild who lives with you in the Philippines or Thailand does not qualify as a dependent for U.S. purposes.
Should I switch from the FEIE to the Foreign Tax Credit to get the child tax credit refund?
In a high-tax country with U.S.-citizen children, often yes: the FTC wipes out the U.S. tax and the refundable credit of up to $1,700 per child is paid to you. In a low-tax country the answer depends on the numbers, and remember that dropping the FEIE after claiming it is a revocation that locks you out for five years.
Does the Child Tax Credit phase out differently if I file separately because my spouse is a non-resident alien?
Yes. Married filing separately uses the $200,000 modified-AGI threshold instead of the $400,000 joint threshold. The credit itself is otherwise fully available on an MFS return.
Sources and references
IRS — Child Tax Credit · IRS — Schedule 8812 and instructions · IRS — Child Tax Credit guidance (see current Schedule 8812 instructions) · IRS Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad · IRS Publication 501, Dependents · U.S. Department of State — Birth abroad and the CRBA · SSA — Federal Benefits Units abroad (SSN applications) · IRS — Tax year 2026 inflation adjustments.