U.S. TAX GUIDE IN THE UK
Can you receive an actual refund from the US Child Tax Credit in the UK?
Yes, you can receive a refund from the Child Tax Credit even if you don’t owe US taxes. This refundable credit can result in actual cash back.
How does the Child Tax Credit work differently from a tax deduction?
The Child Tax Credit directly reduces your tax liability, and any excess can be refunded. For instance, if you have a $2,000 credit per child but owe $1,000 in taxes, you could get the remaining $1,000 as a refund.
Is the refund from the Child Tax Credit really money you can use?
Absolutely. If other credits or deductions reduce your tax liability to zero, any remaining Child Tax Credit becomes a refund, putting actual money in your pocket.
What criteria must a child meet to qualify for the Child Tax Credit?
To qualify, a child must:
- Be under 17 at the end of the tax year.
- Have lived with you for more than half the tax year.
- Be claimed as a dependent on your tax return.
- Have a valid Social Security Number.
- Be your child, stepchild, sibling, or a descendant of one of these (including adopted and foster children).
What if I’m self-employed?
Self-employed US expats can claim the Child Tax Credit if they meet eligibility criteria and contribute to their host country’s social security system or its equivalent.
How much can I claim through the Additional Child Tax Credit?
For 2023, you can claim up to $2,000 per qualifying child, with up to $1,600 being refundable. For 2024, the refundable portion increases to $1,700.
How does the Additional Child Tax Credit work?
If your Child Tax Credit exceeds your tax liability, the Additional Child Tax Credit allows you to receive a refund even with no tax owed. For 2024, the refundable portion is up to $1,700 per qualifying child. This is particularly beneficial for families with lower tax liabilities due to other credits or deductions.
How to qualify for the Additional Child Tax Credit refund?
To claim the refundable Child Tax Credit of $1,700 per child for 2024, you need a minimum Modified Adjusted Gross Income (MAGI). Here’s how it works:
- Subtract $2,500 from your MAGI.
- Take 15% of the remaining amount to determine your maximum claimable credit up to $1,700 per child.
Example with One Child
If your MAGI is $15,000:
- Subtract $2,500, leaving $12,500.
- 15% of $12,500 is $1,875.
- You can claim up to $1,700.
Example with Two Children
To claim $3,400 for two children:
- Your MAGI must exceed $25,167.
- Subtracting $2,500 leaves $22,667.
- 15% of $22,667 is $3,400.
What is the income cap for the Child Tax Credit?
The phase-out begins at:
- $200,000 for single filers, heads of household, or married filing separately.
- $400,000 for married filing jointly. For every $1,000 above these thresholds, the credit reduces by $50.
How to Amend a Previously Filed Tax Return?
If you realize you qualify for the Child Tax Credit after filing, you can amend your return. Here’s the process:
- Complete a detailed tax questionnaire.
- Upload the previous year’s tax return.
- Our IRS-licensed accountants will prepare and review your amended return for submission.
Can you amend it by using the Foreign Earned Income Exclusion?
Yes, if using Form 2555 impacted your Child Tax Credit, you can amend your return. You can file for the last three years depending on deadlines.
Filing an Amended or New Tax Return
Amended Returns:
- Fill out our tax questionnaire.
- Upload past returns.
- We prepare and submit your amended return after your review.
New Returns:
- Complete the questionnaire.
- Upload documentation.
- We prepare and submit your return after your review.
Can the Child Tax Credit Refund be claimed through the Tax Amnesty Program?
Yes, depending on your circumstances, you can claim the Child Tax Credit refund while participating in a tax amnesty program. We evaluate each case to ensure eligibility and help you receive the refund.
