Leveraging Child Tax Credits

Learn the different types of child tax credits you can claim on your tax return

Why it matters: Child-related tax deductions and credits can significantly lower your tax bill.

Child Tax Credit (CTC)

Eligible parents or guardians can claim $2,000 for each qualifying child under 17 years old with a social security number (SSN). The credit is lower for higher-income taxpayers.

Additional Child Tax Credit (ACTC)

If the Child Tax Credit exceeds your tax liability, you may instead qualify for the Additional Child Tax Credit, which can get refunded to you.

Credit for Other Dependents

You can claim a nonrefundable credit of up to $500 for each qualifying relative dependent, such as a child with an Individual Taxpayer Identification Number (ITIN).

Child and Dependent Care Credit (CDCC)

This credit helps cover childcare expenses while parents work or seek employment. It's based on a percentage of qualifying expenses and phases out with income level.

Earned Income Tax Credit (EITC)

This credit provides financial assistance to low- to moderate-income families with qualifying children.

Adoption Tax Credit

If you've adopted a child, you may be eligible for a tax credit to offset adoption expenses.

Education Credits

These credits indirectly benefit families with children attending higher education institutions.

Medical Expenses

You can deduct medical expenses for your qualifying child or relative if you itemize deductions and they exceed 7.5% of your adjusted gross income.

Concluding Thoughts

Child or dependent tax deductions and credits can help Australian expats in the US reduce their tax burden and support their families financially. However, tax laws can change, so it's important to consult with a tax professional or refer to the latest IRS guidelines to ensure eligibility and compliance with the US tax system.