Child Tax Credit Refund in UK

U.S. Tax Help When You’re An Expat In The U.K. ➥ Child Tax Credit Refund in U.K

Is the child tax credit refund real money that you can pocket? How do I know if I’m eligible and how much I can get?

Many are eligible to claim the Child Tax Credit refund but believe they are not, as it seems unusual to pay no tax whatsoever to the US but still receive a refund from the US for their children.

How is it different to a tax deduction?

If you qualify for Child Tax Credit and this brings your US tax liability to below 0, the IRS will refund you the remaining credit. If you have one dependent child reported on your tax return, and this dependent is child is qualified for child tax credit purposes, you can have a refundable credit of up to $1,600 USD per child.

Is this refund real money that you can pocket?

Foreign tax payments you’ve made can offset your US tax liability to 0 through tax credits. If you are a US person living in the UK, the tax payments you have already made to the UK can offset the amount of your US tax liability so that it is 0. Since your tax liability is already 0, the Child Tax Credit refund is given to you and is not just a credit on your IRS account. Effectively, this is real money put into your pocket from the IRS.

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What are the criteria for a child to be eligible under a child tax credit refund?

For a child to be eligible for you to receive a Child Tax Credit refund they must meet the following criteria:

The child must be under 17 years old for the entirety of the year you are claiming for.
You must have covered at least half of the child’s living expenses for the year.
The child must be claimed as your dependent on your tax return.
The child must be a US citizen or Green Card Holder who has a valid Social Security Number (very important).
The child must have lived with you for over half of the year (over 6 months).
The child must meet the relationship test. They must either be your child, stepchild, foster child, sibling, stepsibling, or a descendant of any of these individuals (such as grandchildren, nieces or nephews). A lawfully adopted child is treated as your own child.

What if I’m self-employed?

If you are self-employed and wanting to claim for a child tax credit refund, to qualify you must also have made contributions to the country’s social security equivalent, such as National Insurance in the UK.

How much is available to be claimed as a refund?

After an increase following the Tax Cuts and Jobs Act (TCJA), the maximum amount per qualifying child is now $2,000. However, the maximum amount that can be refunded, even if the taxpayer does not owe any tax, is $1,400.

Is there any credit available for dependents who don’t qualify for a Child Tax Credit refund?

The maximum credit for each qualifying dependent who is not eligible under child tax credit is $500. Dependents who don’t qualify for child tax credit includes those age 17 or older and dependents who don’t have a valid Social Security Number.

Additional Child Tax Credit:

You may be able to claim Additional Child Tax Credit if your Child Tax Credit is greater than the amount of income tax you owe, therefore owing too little tax to take full advantage of the Child Tax Credit refund.

What is the minimum and maximum amounts I need to earn to claim the refundable credit?

To receive the full child tax credit refund, you must earn a minimum amount of money but also not earn over a certain amount. This is because the credit was designed to help those in lower income brackets.

The minimum amount in order to claim a full refundable credit of $1,400 per child is $12,000. If you earn less than $12,000 but more than $2,500 you may still be able to claim a portion of the refundable credit. If you had 3 eligible children and were earning $12,000 a year, you would get a refund of $1,400 x 3.

The maximum amount you can earn to receive the credit refund depends on your filing status. A single filer, head of household or married filing separately, the maximum threshold is $200,000 a year. For every $1,000 earned above $200,000 you lose $50 from the refundable credit. So, if you are $1,000 above the threshold, then you would get $1,350 instead of $1,400 per child. If married filing jointly, the threshold is $400,000.

How can I easily calculate how much child tax credit refund I can receive?

Use our Child Tax Credit Calculator to find out your total estimated refund, quickly and easily. You will need to input your income for the previous four years.

What if I’ve already filed?

If you meet the criteria to qualify for a refund, we will file an amended tax return.

What if I’ve already filed using the FEIE / 2555?

We will file an amended tax return with the correct changes.

What is the process for filing?

For amended tax returns:

You will need to complete a tax questionnaire and upload your previous tax return, and a specialist IRS licensed accountant will prepare new returns and send them to the IRS after your review.

For new tax returns:

You will need to complete a tax questionnaire and upload the relevant documents, and a specialist IRS licensed accountant will prepare new returns and send them to the IRS after your review.

Can I apply for a child tax credit refund while using the tax amnesty program?

Generally speaking, it is possible to apply for the child tax credit refund while using the amnesty program, but the judgement will be made on a case by case basis. If you are eligible, you can get this credit refund as real money in your pocket.