Two countries, one child, two payers. Each decides under its own law whether it pays.
Child benefit and the Child Tax Credit: the form you choose decides
Part of the guide US tax obligations abroad: what your US passport demands every year
If you are a US citizen raising children in Europe, you deal with two family benefit systems that want nothing to do with each other. One pays monthly and asks where you live. The other works on a yearly basis and asks for a number that many children from binational families have never been given. This page explains what the IRS requires for the Child Tax Credit, why a single form decides the refundable part, and which filing status is possible with a spouse who has no US passport.
1Two systems running side by side
The US taxes its citizens wherever they live, so the American tax relief for children also applies wherever you live. At the same time, you and your children live in a country that pays its own family benefits. Each system has its own conditions and its own authorities. Your local benefits office does not check what the IRS grants you, and the IRS does not check what that office pays.
That leads to the most important point on this page: whether you receive child benefit is decided by the law of the country you live in. Whether you receive the Child Tax Credit is decided by US law. So the question is never which of the two you choose, but whether you meet the conditions on both sides. For the full picture of your US tax obligations, see the overview of US tax obligations for Americans living in Europe.
3The Child Tax Credit: what the IRS requires for your child
The Child Tax Credit is a tax credit. It reduces your US income tax by up to $2,200 per child, the same for tax years 2025 and 2026. For 2026 the IRS confirmed the amount in Revenue Procedure 2025-32; from then on it is adjusted for inflation. A child qualifies if, at year end, they are under 17, are your child, stepchild, foster child, sibling or a descendant of one of these, lived with you for more than half the year, did not provide most of their own support, are listed as your dependent on your return, and are a US citizen, US national or US resident.
For families in Europe, that last condition is where things most often get stuck. A child born abroad to an American parent can acquire US citizenship at birth if the parent meets the requirements of the Immigration and Nationality Act. The proof is the Consular Report of Birth Abroad, Form FS-240, which under the State Department's Foreign Affairs Manual certifies that citizenship was acquired at birth.
Living together, on the other hand, is rarely a problem. The IRS asks whether the child lived with you for more than half the year, not whether that was in the US.
4The Social Security number: the hurdle before the first dollar
From tax year 2025, the IRS requires two numbers for the Child Tax Credit. You yourself need a Social Security Number that is valid for employment in the US. If you file jointly, it is enough for one of you to have such a number; the other then needs an SSN or an ITIN. And every child you claim the credit for also needs an SSN valid for employment.
Timing is everything. The Social Security Administration must issue the number before the filing deadline, including extensions. If your child's SSN is issued after that, it no longer helps for that year, not even with a later amended return. So if you discover in spring that the number is missing, apply for it right away and keep an eye on the extension. The deadlines that apply to Americans abroad are in the deadline calendar for Americans abroad.
If a child has no SSN but has an ITIN or an Adoption Taxpayer Identification Number, the Credit for Other Dependents remains. It is $500, is not refundable and also requires the child to be a US citizen, US national or US resident.
Form 1040, FBAR and Streamlined for US citizens living in Europe.
5Tax credit and refund: why the refundable part matters
If the European tax on your salary is higher than the US tax, your US income tax can drop to zero after the credit. In that case a credit that only reduces tax gets you nothing. What counts is the refundable part, the Additional Child Tax Credit. For 2025 and 2026 it is up to $1,700 per child and is paid out when your tax is too low to absorb the full credit.
How much is refunded depends on your earned income. The Schedule 8812 worksheet takes 15 percent of earned income above $2,500 and caps the result at $1,700 per child. An example: with earned income equivalent to $40,000, 15 percent of $37,500 comes to exactly $5,625. With two children the cap is $3,400, which is fully reached. With earned income of $10,000, it would be only $1,125 for all children combined. From three children, the form offers a second calculation based on US Social Security taxes paid.
Above a modified income of $200,000, or $400,000 when filing jointly, the credit phases out. And the IRS does not pay refunds that include the Additional Child Tax Credit before mid-February, including the part of the refund that has nothing to do with the credit.
| Item | Amount | Rule |
|---|---|---|
| Child Tax Credit per child under 17 | $2,200 | reduces US tax, not refundable |
| Additional Child Tax Credit per child | up to $1,700 | refundable part when tax is too low |
| Calculation of the refundable part | 15% of earned income above $2,500 | Schedule 8812 worksheet |
| Phase-out from | $200,000, filing jointly $400,000 | modified income per Schedule 8812 |
| Credit for Other Dependents | $500 | for dependents who do not qualify for the Child Tax Credit |
| With Form 2555 | no refundable part | Instructions for Schedule 8812 |
Source: IRS, Child Tax Credit (page dated September 21, 2026); IRS, Instructions for Schedule 8812 (2025); IRS Revenue Procedure 2025-32, section 4.05 (2026: $2,200 and $1,700).
6Form 2555 or Form 1116: the choice that decides your refund
For a salary earned in Europe, there are two ways to avoid double taxation. With the Foreign Earned Income Exclusion on Form 2555, you take your foreign salary out of US taxation entirely, up to a limit ($132,900 for 2026). With the Foreign Tax Credit on Form 1116, you report the salary for US tax and credit the European tax against it.
For parents, the difference is significant. The instructions for Schedule 8812 say it plainly: if you file Form 2555, you cannot claim the Additional Child Tax Credit. The nonrefundable part remains, but it does nothing for you if no tax is left after the exclusion. With the Foreign Tax Credit, on the other hand, your earned income stays in the calculation and you are entitled to the refundable part. With two children, that can mean up to $3,400 a year.
That does not mean the Foreign Tax Credit is always the better choice. With high incomes, income taxed lightly in Europe, or rental income, the math can turn out differently. How to compare the two methods is explained in FEIE or Foreign Tax Credit for salary earned in Europe. For families, the Child Tax Credit always belongs in this calculation.
7Married to a spouse without a US passport
In many families, only one parent is American. For the US return, your spouse is then a nonresident alien, and you have three options, which IRS Publication 54 describes.
The first is married filing separately. You report only your own income and leave your spouse out. You claim the Child Tax Credit with your SSN and your child's SSN.
The second is head of household. If your spouse is a nonresident alien at any time during the year and you do not choose to file jointly, you are treated as unmarried for this status. Head of household requires that you pay more than half the cost of keeping up a home for a child or another dependent; your spouse does not count for this. You then use the head of household tax rates.
The third is filing jointly by election. You both declare that your spouse is treated as a US resident for the entire year. You then both report your worldwide income, not just for that year but for every year that follows until the election ends. To make the election, your spouse needs an SSN or an ITIN, and you attach a statement signed by both of you to your first joint return. Whether it pays off depends on how much your spouse earns and how heavily that income is taxed in Europe.
| Filing status | What is reported | Condition | Child Tax Credit |
|---|---|---|---|
| Married filing separately | your income only | no election needed | with your SSN and your child's SSN |
| Head of household | your income only | you pay more than half the household costs for a child or another dependent | with your SSN and your child's SSN |
| Jointly by election, spouse treated as a US resident | worldwide income of both spouses, including in later years | spouse's SSN or ITIN, statement signed by both | a valid SSN for either spouse is enough |
Source: IRS Publication 54 (Rev. December 2025), chapter 1, Nonresident Alien Spouse Treated as a Resident and question 11; IRS, Instructions for Schedule 8812 (2025).
8What about local child benefit on your US return?
If you have not filed a US return for years and only found out because of your children, you are far from alone. Americans abroad have a dedicated procedure for catching up on recent years. You can read how it works under the Streamlined Procedure explained.
Your US tax question, answered by people who know both sides.
9What to prepare
Before your return is prepared, a quick review is worth it. It saves follow-up questions and keeps a number from arriving too late:
- Your children's citizenship: Does each child have a Consular Report of Birth Abroad or a US passport?
- Social Security numbers: Do you and each child have an SSN valid for employment, and was it issued before the filing deadline?
- Earned income: Your year-end pay statements for the year, converted into dollars.
- Method: Did you file Form 2555 in earlier years? Then switching to the Foreign Tax Credit should be part of the review.
- Spouse: Which filing status fits, and does your spouse have an SSN or ITIN if you want to file jointly?
- Local family benefits: Decisions from the authorities that pay your family benefits, so all the figures are in one place.
With these documents, we can work out what your family is entitled to on both sides. In the end, the US side comes down to two things you can sort out early: the numbers and the method.
- Child benefit in your home country follows the law of the country where you live; the Child Tax Credit follows US law. Each system assesses you independently.
- The Child Tax Credit is up to $2,200 per child under 17; up to $1,700 of it is refundable if your US tax is too low.
- You and your child need a Social Security number valid for employment, issued before the filing deadline, including extensions.
- If you file Form 2555 for the Foreign Earned Income Exclusion, you lose the refundable part. With the Foreign Tax Credit, you keep it.
- With a spouse who has no US passport, you can choose married filing separately, head of household or filing jointly by election.
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