Clark Stott has been with Expat Tax Online since 2015. Being a dual national based in the UK, Clark has unique experience helping US citizens (and Accidental Americans) become tax compliant via the Streamlined Tax Amnesty program. Clark likes to help Americans in the UK keep their tax situations as simple as possible to avoid harsh IRS treatment.
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The Child Tax Credit (CTC) is a tax benefit the US government provides to help parents or guardians with raising children.
Generally, this credit can reduce the federal income tax you owe. If the credit amount is larger than your tax bill, you might be able to receive some of the difference as a refund.
What is the Additional Child Tax Credit?
For Americans living abroad, the Additional Child Tax Credit (ACTC) is particularly important. This credit can help you get a refund if your Child Tax Credit exceeds the taxes you owe.
Who qualifies for the Additional Child Tax Credit in 2024?
To qualify for the ACTC, you and your child must meet several criteria:
- Child’s Age: The child must be under 17 by the end of the year.
- Relationship: The child must be your biological child, stepchild, adopted child, foster child, sibling, or their descendant.
- Dependency: The child must be claimed as a dependent on your tax return.
- Citizenship: The child must be a US citizen, national, or resident alien.
- Social Security Number (SSN): The child must have a valid SSN before the tax return filing deadline.
- Residency: The child must have lived with you for more than half of the year.
- Support: The child cannot have provided more than half of their own financial support during the year.
How much is the Child Tax Credit worth in 2024?
In 2024, the Child Tax Credit is worth up to US$2,000 per child. If you owe taxes, this credit can reduce your tax bill by up to US$2,000 per qualifying child. If you don’t owe taxes, you could still receive up to US$1,600 per child as a refund through the Additional Child Tax Credit.
How do you claim the Child Tax Credit?
Here’s how to claim the Child Tax Credit:
- Determine Eligibility: Check that your child meets all the criteria mentioned above.
- Complete Your Tax Return: Use Form 1040 or Form 1040-SR.
- Include Child Information: Provide your child’s details, such as their name, Social Security Number, and your relationship to them.
- Calculate the Credit: Use Schedule 8812 to figure out how much credit you can claim.
- File Your Return: Send your completed tax return to the IRS.
Is the Child Tax Credit refundable?
Yes, the Child Tax Credit can be refundable. This means that if the credit reduces your tax bill to zero, you can receive the leftover amount as a refund, up to US$1,600 per child in 2024.
How does income affect the Additional Child Tax Credit?
The amount of Additional Child Tax Credit (ACTC) you can receive depends on your income. Here’s how it works:
- Income Limits:
- If you’re Single and your income is above US$200,000, your ACTC starts to decrease.
- If you’re Married Filing Jointly and earn more than US$400,000, your ACTC also begins to reduce.
For every US$1,000 you earn above these amounts, the credit is reduced by US$50.
Example 1: Married Couple
- If you and your spouse file jointly and have an income of US$350,000 with two qualifying children, you can receive the full ACTC amount of US$3,200 (US$1,600 per child) because your income is below US$400,000.
Example 2: Single Filer
- If you file as a single person and earn US$210,000 with one qualifying child, your ACTC will be reduced. Since your income exceeds US$200,000 by US$10,000, your ACTC decreases by US$500, giving you US$1,100 instead of US$1,600.
Can you receive the Additional Child Tax Credit if you’re self-employed?
Yes, you can.
Being self-employed does not disqualify you from the ACTC. As long as your income and your child meet the eligibility criteria, you can claim this credit on your tax return just like any other taxpayer.
Are there changes to the Additional Child Tax Credit for children with disabilities?
No, the rules for claiming the ACTC remain the same for children with disabilities as for other qualifying children in 2024.
However, there may be additional credits available, such as the Earned Income Tax Credit (EITC) or the Credit for Other Dependents, which can offer further financial help.
It’s extremely recommended to get a tax professional’s help, as they can help you claim all the credits you’re eligible for.
How does the Additional Child Tax Credit interact with other tax credits?
The ACTC can be combined with other tax credits, like the Earned Income Tax Credit (EITC) and the Child and Dependent Care Credit.
However, each credit has its own set of rules, and you calculate them separately on your tax return—combining credits can increase your tax refund or reduce the amount you owe.
What happens if your income changes during the year?
Changes in your income can affect the ACTC amount you’re eligible for.
If your income increases significantly, the credit might be reduced or even phased out. Conversely, if your income decreases, you might qualify for a larger ACTC or be eligible for the refundable portion.
Can non-custodial parents claim the Additional Child Tax Credit?
Generally, only the custodial parent (the one the child lives with most of the year) can claim the ACTC.
However, a non-custodial parent can claim the credit if the custodial parent agrees and signs Form 8332 to release their claim. The non-custodial parent must then attach this form to their tax return.
