US-UK · Journal
Child Tax Credit for Americans in the UK: FEIE vs FTC
US parents in the UK can claim up to $2,200 per child, $1,700 refundable, but not if they file Form 2555. How the Foreign Tax Credit route can unlock a refund.
US parents in the UK can claim up to $2,200 per child, $1,700 refundable, but not if they file Form 2555. How the Foreign Tax Credit route can unlock a refund.
Yes, US citizens living in the UK can claim the Child Tax Credit, worth up to $2,200 per qualifying child for both 2025 and 2026, of which up to $1,700 per child can be paid out as a refund through the Additional Child Tax Credit. The catch is the Foreign Earned Income Exclusion: anyone who files Form 2555 cannot claim the refundable portion at all. For many UK-resident American families, choosing the Foreign Tax Credit instead turns a nil US return into a cash refund.
The Child Tax Credit (CTC) is claimed on Schedule 8812 attached to Form 1040. It has two layers, and understanding them is the whole game for Americans abroad.
The non-refundable layer. The CTC first reduces your US income tax. According to the 2025 Schedule 8812 instructions, the maximum CTC for each qualifying child increased to $2,200. If you owe no US tax, this layer is worth nothing on its own.
The refundable layer. Whatever part of the credit you could not use against tax may be paid to you as the Additional Child Tax Credit, up to $1,700 per qualifying child for 2025. The ACTC is calculated as 15% of your earned income above $2,500, capped at $1,700 per child. Families with three or more qualifying children can use an alternative calculation based on Social Security and Medicare taxes paid, if that gives a larger figure.
2026. The OBBBA made the enlarged credit permanent and set it at $2,200 for 2025, indexed for inflation after that. In Revenue Procedure 2025-32 the IRS confirmed that for taxable years beginning in 2026 the maximum credit remains $2,200 and the refundable amount remains $1,700. In other words, the headline figures are the same for the 2025 return you may be finishing now and the 2026 return you will file next year.
Phase-out. The credit begins to reduce once modified AGI exceeds $400,000 on a joint return or $200,000 for all other filing statuses. The Schedule 8812 worksheets reduce it by 5% of each $1,000 (or part of $1,000) above the threshold, which works out at $50 per $1,000. Few middle-income UK households are affected, but senior professionals and business owners should check.
The IRS Child Tax Credit page sets out the tests. In summary, the child must:
That last point catches many families. A child born in London to an American parent is often a US citizen from birth, but the IRS only allows the CTC once the child has an SSN. Our guide on when a child born abroad to a US parent has a US tax filing duty explains how US citizenship passes to children born overseas.
The 2025 Schedule 8812 instructions state that, beginning in tax year 2025, you must have a valid SSN to claim the CTC or ACTC. "Valid" means an SSN that is valid for employment and issued by the Social Security Administration before the due date of your 2025 return.
For couples, the rule is more forgiving than it first appears. On a joint return, only one spouse needs a valid SSN. The other spouse must have either an SSN or an ITIN, issued on or before the due date of the return. That matters for the many US-UK households where one partner is a British national with no US number.
The child's rule is stricter. An ITIN does not qualify the child for the CTC or ACTC. If your child has an ITIN, or obtains an SSN only after the return's due date, you should look at the Credit for Other Dependents instead.
The Credit for Other Dependents (ODC) is worth up to $500 per dependant who does not qualify for the CTC or ACTC. Typical examples are a child aged 17 or over, or a child who has an ITIN rather than an SSN. The dependant must still be a US citizen, US national or US resident alien, and must have an SSN, ITIN or ATIN.
Two limitations matter abroad. First, the ODC is non-refundable: it only reduces US tax you would otherwise owe. Second, it shares the same $200,000 / $400,000 phase-out thresholds as the CTC. For a UK family whose US tax is already nil after foreign tax credits, the ODC often has no practical value in that year.
The Foreign Earned Income Exclusion lets a qualifying American abroad exclude up to $130,000 of foreign earned income for 2025, rising to $132,900 for 2026. It is simple and popular. But the Form 2555 instructions are blunt: you can't take the additional child tax credit if you claim either of the exclusions or the housing deduction. Schedule 8812 repeats the same rule, and Publication 54 lists the ACTC among the consequences of choosing the exclusion.
Here is why that stings. If the FEIE wipes out your US taxable income, you have no US tax for the non-refundable CTC to reduce, and the refundable ACTC is barred. The credit you are otherwise entitled to simply disappears.
The FEIE does not remove the non-refundable CTC entirely. If you have income the exclusion does not cover, such as US-source investment income or earnings above the cap, and that income creates US tax, the non-refundable CTC can still reduce it. What you lose is the refund.
Under the Foreign Tax Credit, you report your UK salary in full and claim a credit for the UK income tax you paid on it. Because UK income tax on employment income is frequently higher than the US tax on the same income, the credit often reduces US income tax to nil, with the surplus carried forward. Publication 514 allows unused foreign tax to be carried back one year and forward ten.
The key mechanical point is the order of credits. On Schedule 8812's Credit Limit Worksheet A, the foreign tax credit from Schedule 3 is subtracted from your tax before the non-refundable CTC is measured. Once UK tax has eliminated your US liability, the whole unused CTC flows into the ACTC calculation, subject to the $1,700-per-child cap and the 15% earned income formula. Because your earned income remains on the return (it is not excluded), the 15% test is usually met easily.
Our fuller comparison of the two methods, including the situations where the FEIE still wins, is in FEIE vs Foreign Tax Credit for US expats in the UK.
The following is an illustrative example only, not a real client, using the 2025 figures above.
Facts. Maya is a US citizen living in Manchester. She files jointly with her husband, who has an ITIN. They have two children, aged 6 and 9, who are US citizens with SSNs issued years ago. Maya's UK salary converts to $110,000. They have no other income. For the example we assume, as is common, that the UK income tax on Maya's salary exceeds the US tax that would be due on the same income. Everyone meets the qualifying-child and SSN rules described above; the husband's ITIN is fine because only one spouse needs an SSN.
| Step | FEIE route (Form 2555) | FTC route (Form 1116) |
|---|---|---|
| Foreign earned income reported | $110,000, all excluded (below the $130,000 cap) | $110,000, fully taxable in the US |
| US income tax before child credits | $0 | Offset to $0 by the UK tax credit |
| Non-refundable CTC used | $0 (no tax to reduce) | $0 (no tax left to reduce) |
| Refundable ACTC available? | No: barred for Form 2555 filers | Yes |
| ACTC calculation | Not applicable | Lesser of $3,400 (2 x $1,700) and 15% x ($110,000 - $2,500) = $16,125 |
| Result | No refund from the child credits | ACTC of $3,400 payable |
| Unused UK tax | Cannot be credited on excluded income | Carried forward for future years |
The difference is $3,400 for a single year, and because the 2026 figures are unchanged, a similar family should see a similar result on the 2026 return. Their $110,000 is well below the $400,000 joint phase-out threshold, so there is no reduction.
The example is deliberately simple. Real returns involve exchange rates, the tax treatment of UK pension contributions, investment income, and state rules for families with a US state tie. A licensed CPA or Enrolled Agent reviews and signs off every return we prepare, precisely because these interactions change the answer from family to family.
1. Confirm each child's status. Check that each child is a US citizen (or national or resident alien), was under 17 at year end, and lived with you for more than half the year.
2. Obtain SSNs in good time. The child's SSN, and yours, must be issued before the return's due date. If the child cannot get one in time, plan to claim the $500 ODC if the child has an ITIN.
3. Model both methods. Run the return under the FEIE and under the FTC before choosing. Include the value of the ACTC in the comparison, not just the income tax.
4. Mind the FEIE revocation rule. If you have claimed the FEIE before and want to switch, note that revoking the choice means you can't claim the exclusion for your next five tax years without IRS approval, per the Form 2555 instructions. That is a strategic decision, not a formality.
5. Complete Schedule 8812 and Form 1116. Attach Form 1116 for the foreign tax credit and Schedule 8812 for the CTC, ACTC and ODC.
6. File on time or with the automatic extension. US citizens living abroad get an automatic two-month extension to June 15 to file, but Publication 54 notes that interest runs on unpaid tax from the regular due date.
7. Keep records. Retain UK P60s, Self Assessment calculations and proof of each child's residence with you.
Many American parents in the UK discover the ACTC only after years of not filing, or years of filing under the FEIE. Two separate rules decide whether earlier years can still pay out.
The refund time limit. The IRS explains that you must claim a refund within three years from the date you filed the original return or two years from the date you paid the tax, whichever is later. For people who never filed, the IRS says taxpayers usually have three years to file and claim their refunds, after which the money becomes the property of the US Treasury. In March 2026 the IRS warned that the deadline for most 2022 refunds was 15 April 2026. The exact cut-off for an individual can depend on filing dates and extensions, so treat each year separately.
The Streamlined Foreign Offshore Procedures. For Americans abroad whose failure to file was non-willful, the Streamlined Foreign Offshore Procedures require delinquent or amended returns for each of the most recent three years for which the due date has passed, plus six years of FBARs and a signed Form 14653 certification. Those who qualify are not subject to failure-to-file, failure-to-pay, accuracy-related, information return or FBAR penalties.
Putting the two together: the Streamlined submission brings you back into compliance, but it does not reopen refund years that have already closed. Only credits for years still inside the refund window can produce a payment. That is one reason not to delay once you realise returns are missing. Our guides to the Streamlined Foreign Offshore Procedure and to catching up on missed US tax returns explain the process.
The US credit and UK Child Benefit are claimed under entirely separate systems. On the UK side, the High Income Child Benefit Charge applies where you or your partner have income over £60,000, for tax years from 2024-25 onwards, according to GOV.UK. The charge is 1% of the Child Benefit for every £200 of income above the threshold, so at £80,000 or more it equals the full benefit.
GOV.UK also notes that you can opt out of receiving the payments to avoid the charge while still getting National Insurance credits, which count towards the State Pension. For a parent who is not working, that credit can be valuable. We cover the UK planning options, including pension contributions that reduce adjusted net income, in our High Income Child Benefit Charge guide.
If you have children and have been filing under the FEIE, or have not filed at all, it is worth having both methods modelled before your next return and before any refund years close. The comparison is usually quick; the consequences of the method you choose can last several years. Our US-UK expat tax team prepares returns for American families in the UK, and a licensed CPA or Enrolled Agent reviews and signs off every filing. This article is general information, not advice for your circumstances.