Want to know how to save money on your taxes? If you have a family, you can easily save money with US taxes through the child tax credit and foreign housing exclusion.
The child tax credit allows you to get refundable credit of up to $1,500 per child. Qualified housing expenses over €16,944 may help you qualify for US tax exemption.
The Child Tax Credit & Additional Child Tax Credit
The US provides financial assistance to parents through tax credits and refunds, regardless of where they live and work.
The Child Tax Credit is usually the non-refundable portion of this credit, while the Additional Child Tax Credit refers to the refundable portion. In this sense, ‘additional’ does not mean an additional credit or additional child! MyExpatTaxes specializes in getting US Expats their due Additional Child Tax Credit, even if that means amending prior year returns. To see if you are eligible for the refund, check out our Tax Tips for the American Family Abroad.
For 2021, there were a LOT of changes to the (Additional) Child Tax Credit due to the pandemic. If you didn’t claim your total tax credit – you can do so via an amendment. For Tax Year 2022, you’ll notice most things going back to “normal,” except with the bonus that expats get an increased refund. We’ll put each year side by side.
|Tax Year 2020||Tax Year 2021||Tax Year 2022|
|Max Age Limit||17 years old||18 years old||17 years old|
|Child Tax Credit Amount||$2,000||$3,600 – Under 6|
$3,000 – 6 and above
|Additional Child Tax Credit Amount||$1,400||$3,600 – Under 6|
$3,000 – 6 and above
|Other Dependent Credit||$500||$500||$500|
Max Age Limit
Only qualifying children dependents under the max age limit are eligible for the (Additional) Child Tax Credit. If your child was UNDER the max age limit on December 31st of that tax period, they are eligible. Otherwise, they will fall into the “Other Dependent” Credit bucket.
For example, your child turned 17 on December 1st, 2022. They are not UNDER 17, so they are not eligible for the (Additional) Child Tax Credit on your 2022 Tax Return.
Child Tax Credit:
For 2022 Tax Returns
A $2,000 tax credit can be claimed by American expat families for each of their dependent children who have valid US Social Security Numbers, and are under the age of 17.
Additional Child Tax Credit
For 2022 Tax Returns
If families do not owe US taxes, a max of $1,500 of the $2,000 credit per qualifying child is refundable.
Foreign Housing Exclusion
The Foreign Housing Exclusion allows US citizens abroad to deduct any excess of housing expenses, paid by the employer over 16% of the Foreign Earned Income Exclusion (FEIE) amount of that year ($112,000 in 2023 for the 2022 tax season). Qualified housing expenses might be eligible for US tax exemption. However, there is a limit to how much foreign housing expenses you can deduct (more below).
In addition to foreign housing expenses, you can also get an exclusion from the following: home utilities, personal property insurance, accessory rentals, and household repairs. The exclusion does not include furniture you purchase online, domestic labor, and mortgage payments.
Qualify for the Foreign Housing Exclusion
To qualify for this expat tax benefit and save money with US taxes, you need to be eligable for the FEIE through this:
- Pass the Physical Presence Test or the Bona Fide Resident Test
- To pass the Physical Presence Test: You need to be outside of the US for 330 full days in a consecutive 12-month period that begins or ends in the tax year.
- To pass the Bona Fide Rest Test: You need to be a resident of a foreign country and be subject to local income taxes for at least an entire tax year.
Once you are sure you qualify for the FEIE, you can fill out Form 2555, informing the IRS of which test you are eligible under. Or better yet, fill it out electronically through our software!
The MyExpatTaxes software can determine if you qualify for this exclusion and receive a refund. Want to learn more about the Foreign Housing Exclusion tax benefit? Read this. Saving money on your taxes abroad has never been so easy.