How Expats can Save Even More Money with US Taxes

January 17, 2024 | ExpatTaxGuide | 2 minute read
Expat Tax Guide | Everything you need to know about filing taxes abroad in 2024

Verified by IRS Enrolled Agents and CPAs

Want to know how to save money on your taxes? If you have a family, you can easily save money with US taxes through the child tax credit and foreign housing exclusion.

The child tax credit allows you to get refundable credit of up to Default String per child. Qualified housing expenses over $19,200 may help you qualify for US tax exemption.

The Child Tax Credit & Additional Child Tax Credit

The US provides financial assistance to parents through tax credits and refunds, regardless of where they live and work.

The Child Tax Credit is usually the non-refundable portion of this credit, while the Additional Child Tax Credit refers to the refundable portion. In this sense, ‘additional’ does not mean an additional credit or additional child! MyExpatTaxes specializes in getting US Expats their due Additional Child Tax Credit, even if that means amending prior year returns. To see if you are eligible for the refund, check out our Tax Tips for the American Family Abroad.

For 2021, there were a LOT of changes to the (Additional) Child Tax Credit due to the pandemic. If you didn’t claim your total tax credit – you can do so via an amendment. For Tax Year 2022 and 2023, you’ll notice most things going back to “normal,” except with the bonus that expats get an increased refund. We’ll put each year side by side.

	Tax Year 2021	Tax Year 2022	Tax Year 2023
Max Age Limit	18	17	17
Non-Refundable Child Tax Credit	$3,600 – under 6 $3,000 – 6 and over	$2,000	$2,000
Additional Child Tax Credit	$3,600 – under 6 $3,000 – 6 and over	$1,500	$1,600
Other Dependent Credit	$500	$500	$500

Max Age Limit

Only qualifying children dependents under the max age limit are eligible for the (Additional) Child Tax Credit. If your child was UNDER the max age limit on December 31st of that tax period, they are eligible. Otherwise, they will fall into the “Other Dependent” Credit bucket.

For example, your child turned 17 on December 1^st, 2023. They are not UNDER 17, so they are not eligible for the (Additional) Child Tax Credit on your 2023 Tax Return.

Child Tax Credit:

For 2023 Tax Returns

A $2,000 tax credit can be claimed by American expat families for each of their dependent children who have valid US Social Security Numbers, and are under the age of 17.

Additional Child Tax Credit

For 2023 Tax Returns

If families do not owe US taxes, a max of $1,600 of the $2,000 credit per qualifying child is refundable.

Foreign Housing Exclusion

The Foreign Housing Exclusion allows US citizens abroad to deduct any excess of housing expenses, paid by the employer over 16% of the Foreign Earned Income Exclusion (FEIE) amount of that year ($120,000 in 2024 for the 2023 tax season). Qualified housing expenses might be eligible for US tax exemption. However, there is a limit to how much foreign housing expenses you can deduct (more below).

In addition to foreign housing expenses, you can also get an exclusion from the following: home utilities, personal property insurance, accessory rentals, and household repairs. The exclusion does not include furniture you purchase online, domestic labor, and mortgage payments.

Qualify for the Foreign Housing Exclusion

To qualify for this expat tax benefit and save money with US taxes, you need to be eligable for the FEIE through this:

Pass the Physical Presence Test or the Bona Fide Resident Test
1. To pass the Physical Presence Test: You need to be outside of the US for 330 full days in a consecutive 12-month period that begins or ends in the tax year.
2. To pass the Bona Fide Rest Test: You need to be a resident of a foreign country and be subject to local income taxes for at least an entire tax year.

Once you are sure you qualify for the FEIE, you can fill out Form 2555, informing the IRS of which test you are eligible under. Or better yet, fill it out electronically through our software!

The MyExpatTaxes software can determine if you qualify for this exclusion and receive a refund. We recommend reading our blog to learn more about the Foreign Housing Exclusion tax benefit. Saving money on your taxes abroad has never been so easy.

File your US Taxes with MyExpatTaxes