Child Tax Credit for Expats in 2026: Can You Claim It?

If you're an American parent living abroad, you might be wondering: can I claim the Child Tax Credit?

The short answer is maybe — but there are some important rules that affect expats differently than U.S. residents.

The Child Tax Credit Basics

For 2025 (filed in 2026), the Child Tax Credit provides:

• Up to $2,000 per qualifying child under age 17
• Up to $1,700 of that is refundable (the Additional Child Tax Credit)
• The credit phases out at higher incomes

Sounds great, right? Here's where it gets complicated for expats.

The FEIE Problem

If you claim the Foreign Earned Income Exclusion (FEIE), it can significantly reduce or eliminate your Child Tax Credit.

Here's why: The Child Tax Credit is limited to your tax liability. When you exclude income with the FEIE, you reduce your taxable income — and therefore your tax liability.

Example: FEIE Wipes Out the Credit

Sarah's situation:

• Lives in Portugal with two kids
• Earns $90,000 (all foreign earned income)
• Claims the FEIE, excluding her entire income
• Taxable income: $0
• Tax liability: $0
• Child Tax Credit: $0 (nothing to offset)

Even though Sarah has two qualifying children, she can't use the credit because she has no tax liability to reduce.

The Refundable Portion

The Additional Child Tax Credit (ACTC) — the refundable portion up to $1,700 per child — requires earned income.

Here's the catch: income excluded under the FEIE doesn't count as earned income for the ACTC calculation.

So if you exclude all your income with the FEIE, you may not qualify for the refundable portion either.

When Expats CAN Claim the Child Tax Credit

You may be able to claim some or all of the credit if:

1. You Don't Use the FEIE

If you use the Foreign Tax Credit instead of the FEIE, your foreign income remains taxable (before the credit). This creates tax liability that the Child Tax Credit can offset.

This is one reason why the Foreign Tax Credit is sometimes better for expat families — you might get more benefit from the Child Tax Credit than you'd save with the FEIE.

2. Your Income Exceeds the FEIE Limit

If you earn more than the FEIE exclusion ($130,000 for 2025, $132,900 for 2026), the excess creates taxable income and potential tax liability.

Example:

• You earn $180,000
• Exclude $130,000 with FEIE
• $50,000 remains taxable
• Tax liability on $50,000 ≈ $6,000+
• Child Tax Credit can offset this

3. You Have U.S.-Source Income

The FEIE only excludes foreign earned income. If you have U.S.-source income (consulting for U.S. clients, rental income, etc.), that creates tax liability the Child Tax Credit can offset.

4. You Have Investment Income

Investment income (dividends, capital gains, interest) isn't covered by the FEIE. If you have significant investment income, you'll have tax liability that the Child Tax Credit can reduce.

Qualifying Child Requirements

To claim the credit, your child must meet these tests:

The Citizenship/SSN Requirement

This is important for expat families: your child must have a U.S. Social Security Number to qualify. An ITIN won't work for the Child Tax Credit.

If your child was born abroad, you'll need to:

1. Report the birth to the U.S. Embassy/Consulate
2. Apply for a Consular Report of Birth Abroad (CRBA)
3. Apply for a Social Security Number

This process can take several months, so plan ahead.

The $500 Credit for Other Dependents

If your child doesn't qualify for the Child Tax Credit (over 17, doesn't have SSN, etc.), you may be able to claim the Credit for Other Dependents — $500 per qualifying dependent.

This credit has the same FEIE limitation issue, but it's something to consider for older children or other dependents.

Strategic Planning for Expat Families

Option 1: Skip the FEIE

For some families, not claiming the FEIE and instead using the Foreign Tax Credit results in a better overall outcome when you factor in the Child Tax Credit.

When this might work:

• You live in a moderate-to-high tax country
• You have multiple children
• Your foreign tax rate is close to or above your U.S. rate

Run the numbers both ways before deciding.

Option 2: Partial FEIE

You're not required to exclude all your income with the FEIE. You could strategically exclude only part of your income to create enough tax liability to use the Child Tax Credit.

This requires careful calculation — I can help you find the optimal balance.

Option 3: Spouse Strategies

If both spouses work, you might have one spouse claim the FEIE while the other uses the Foreign Tax Credit. This can create tax liability for the Child Tax Credit while still benefiting from some exclusion.

Income Phase-Out

The Child Tax Credit phases out at higher incomes:

• Single: Phases out starting at $200,000 AGI
• Married Filing Jointly: Phases out starting at $400,000 AGI

The credit reduces by $50 for each $1,000 over the threshold.

For most expats, this isn't an issue — if you're earning that much, you likely have other planning considerations anyway.

Common Mistakes

1. Assuming You Can Claim It

Many expats assume they can claim the Child Tax Credit and are surprised when their tax software shows $0. If you're using the FEIE, check your tax liability before counting on this credit.

2. Not Getting a SSN for Foreign-Born Children

If your child was born abroad and you haven't gotten their SSN, start the process now. You can't claim the credit without it.

3. Ignoring the Strategy Question

The FEIE vs. Foreign Tax Credit decision should consider all credits, not just income exclusion. For families, the Child Tax Credit can tip the scales.

4. Not Filing Because You Don't Owe

Even if you owe no tax, you should file to claim the refundable portion of the credit (if eligible). Many expats leave money on the table by not filing.

What About State Child Tax Credits?

Some states offer their own child tax credits. If you're still subject to state taxes, check whether your state has a credit and how it interacts with your expat situation.

The Bottom Line

The Child Tax Credit can be valuable for expat families, but the interaction with the FEIE makes it complicated. Key takeaways:

1. The FEIE can eliminate your Child Tax Credit by reducing tax liability to zero
2. The Foreign Tax Credit may be better for families with multiple children
3. Strategic planning can help you get the best of both worlds
4. Run the numbers before automatically claiming the FEIE

Every family's situation is different. Have kids and wondering whether the FEIE or Foreign Tax Credit saves you more? Let's figure it out together.