Child Tax Credit

Up to $1,400 per eligible child

If you have a child under the age of 17 with a social security number, you may be eligible to receive up to $1,400 per eligible child, even if you have made no tax payments. However, in order to do so, you cannot also take advantage of the Foreign Earned Income Exclusion (FEIE).

If you claimed the Foreign Earned Income Exclusion (FEIE) in the prior year, you must revoke the exclusion for a period of five years following the year of revocation to claim the Additional Child Tax Credit (ACTC).

How do you know to revoke or not to revoke FEIE?

For the five years:

  • You should live in a high-income tax country
  • You should pay a high level of income tax to that foreign country
  • You should have little income from the US
  • You should work most of the time in the foreign country
  • You must have earned income (passive income does not qualify for the ACTC)
  • Recommended that child(ren) remain under 17 for the five years

Pros:

  • May benefit from receiving $1,400 per eligible child

Cons:

  • Can't claim FEIE for the five succeeding tax years
  • You have fewer choices to avoid tax because you can't claim FEIE
  • Risky to revoke FEIE because it depends on unknowns like future income, tax, children, where you live, etc.
  • May result in more tax due in future years than had you not revoked FEIE

These are only some of the factors to consider.  If you are not comfortable with the risks, then do not revoke.  

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