Eligibility Requirements, Benefit Amounts, and What to Know Before Filing
American taxpayers may qualify for the Child Tax Credit if they meet certain conditions.
This article explains what the Child Tax Credit is, the eligibility requirements, and the benefits it provides to taxpayers who are subject to the U.S. tax system.
Eligibility Requirements
The Child Tax Credit may be claimed if the child meets the conditions listed below:
- Have a valid Social Security Number (SSN) for employment in the U.S., issued before the due date of the tax return, including extensions.
- Be under age 17.
- Fall into one of the following categories: son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of them (such as a grandchild).
- Receive financial support from the taxpayer claiming the credit or from other sources, such that the child does not bear more than half of his or her own living expenses during the tax year.
- Live with the taxpayer claiming the credit (the parent or parents) for more than half of the tax year.
- Be claimed as a dependent on the parent’s or parents’ tax return, where a dependent is a person who relies on others for financial support.
- Be a U.S. citizen, U.S. national, or U.S. resident alien.
However, if annual income exceeds $200,000 for an individual or $400,000 for a married couple filing jointly, the taxpayer will no longer qualify for the full Child Tax Credit and may qualify only for partial credit. To claim the credit, the taxpayer must list the qualifying children and dependents on Form 1040 and attach Schedule 8812.
For your convenience, we have summarized the eligibility requirements on the table below:
Requirement | What Is Required | What to Check in Practice |
Social Security Number | The child must have an SSN valid for employment in the U.S. that was issued before the due date of the return, including extensions | Check that the child has the correct SSN and not another type of identification number |
Age | The child must be under age 17 at the end of the tax year | Check the child’s age as of 31 December of the tax year |
Family Relationship | The child must be a son, daughter, stepchild, foster child, brother, sister, or a descendant of any of them | Make sure the family relationship falls within the recognized definitions |
Financial Support | The child should not bear more than half of his or her own living expenses | Check who actually covered the expenses during the year |
Residence | The child must live with the taxpayer for more than half of the tax year | Review the actual living arrangement, especially in cases involving separated parents |
Claimed as a Dependent | The child must be claimed as a dependent on the tax return | Make sure only the eligible taxpayer claims the child |
Citizenship/Residency Status | The child must be a U.S. citizen, U.S. national, or U.S. resident alien | Check that the status meets Internal Revenue Service (IRS) requirements |
Child Tax Credit Amounts
According to the latest changes described by the IRS in connection with legislation referred to in the U.S. as the One Big Beautiful Act, the maximum Child Tax Credit amount increased from $2,000 to $2,200 beginning in tax year 2025, with future inflation adjustments.
If the taxpayer meets all eligibility requirements, the taxpayer may qualify for the full Child Tax Credit (CTC). If income exceeds $200,000 for an individual or $400,000 for a married couple filing jointly, the credit begins to phase out. The Child Tax Credit is reduced by 5% of the amount by which income exceeds those thresholds.
For example, an individual earning $225,000 exceeds the $200,000 threshold by $25,000. Five percent of $25,000 is $1,250. Therefore, a maximum credit of $2,200 would be reduced by $1,250, and the final credit would be $950
What Is the Additional Child Tax Credit?
If a taxpayer qualifies for the Child Tax Credit but cannot use the full credit to reduce tax liability, the taxpayer may qualify for the Additional Child Tax Credit (ACTC), which is the refundable portion of the Child Tax Credit.
In 2025, the Additional Child Tax Credit may be available up to $1,700 per qualifying child, subject to the applicable limitations. As a general rule, eligibility for this credit requires earned income of at least $2,500, and the refundable amount is generally determined based on earned income above that threshold.
It is important to note that taxpayers who use the Foreign Earned Income Exclusion (FEIE), and accordingly file Form 2555, are not eligible for the refundable portion of the Additional Child Tax Credit.
Foreign Tax Credit Versus the Foreign Earned Income Exclusion
In many cases, families choose to use the FEIE because it may appear simpler, but doing so may cost them refundable credits. Instead of using the FEIE, families should consider using the Foreign Tax Credit (FTC) through Form 1116, which allows foreign taxes to be credited while preserving benefits such as the Child Tax Credit.
For many American taxpayers living in Israel, this approach is often more effective. Since Israeli income tax rates are often high enough, taxes paid in Israel can in many cases fully offset any U.S. tax liability. At the same time, unlike FEIE, using FTC generally allows taxpayers to remain eligible for the refundable Child Tax Credit.
It is important to remember that the Additional Child Tax Credit is only one of several factors to consider when deciding whether to claim the FEIE or the FTC.
Common Filing Mistakes
One of the most common mistakes when claiming the Child Tax Credit is using an incorrect Social Security Number or claiming the credit for a child who does not meet the residency requirement. Additional mistakes may occur when parents alternate claiming the credit for the same child without proper coordination, which may lead to an Internal Revenue Service (IRS) review and delays in refunds.
In summary, the Child Tax Credit regime applies not only to U.S. tax residents, but also to U.S. citizens and Green Card holders. Therefore, Israeli citizens may qualify for the Child Tax Credit if they are also U.S. citizens or Green Card holders, and if they and their qualifying children have valid Social Security Numbers, even if they live outside the U.S.
TaxLink – Our Story
TaxLink is an accounting firm with a team of professionals specializing in Israeli and U.S. taxation. Our practical experience working with the IRS and the Israel Tax Authority, together with our deep understanding of the interaction between the two systems, enables us to build an end-to-end solution tailored to your case.
Most clients who contact us do so because they are required to file in the U.S. – whether it is Form 1040, Foreign Account Tax Compliance Act (FATCA) reporting, Foreign Bank Account Report (FBAR) reporting, or a U.S. real estate investment/property. We manage the process as one integrated whole in order to reduce errors, minimize duplication, and help prevent double taxation – all within the framework of the law and the treaty between Israel and the U.S., and in accordance with your specific circumstances.
We would be happy to provide tailored guidance and information regarding the process of claiming the Child Tax Credit in the U.S., including filing for a refund where appropriate. Contact our tax team for personalized advice.
שאלות ומידע רלוונטי
Can a child living in Israel qualify for the Child Tax Credit?
Yes. A child living in Israel may qualify, as long as the taxpayer is a U.S. citizen or a U.S. resident alien, and both the taxpayer and the child have valid Social Security Numbers.
If one parent lives in the U.S. for work while the child remains in Israel, is the parent still eligible for the Child Tax Credit?
In most cases, no. To qualify, the child must live with the taxpayer for at least half of the year. In addition, the child must have a valid Social Security Number and meet the U.S. tax residency requirements. If the parent spends most of the year in the U.S. while the child remains in Israel, the credit cannot be claimed.
Can the Child Tax Credit be claimed if the spouse is not a U.S. resident or U.S. citizen?
Yes, but only if the spouses file a joint return and the spouse has a valid Social Security Number.
What is the difference between the Child Tax Credit and the Additional Child Tax Credit?
The Child Tax Credit reduces tax liability, while the Additional Child Tax Credit provides a refundable amount if the Child Tax Credit exceeds the tax due.
