I am not receiving a refund for child credit tax for my 1 year old daughter. I currently live and work abroad.

[jjgrant]

I am not receiving a refund for my daughter who was born in January 2018. I liv e and work abroad and have filed all of my income under the foreign income exclusion. My husband is not a US citizen so I am filing married, separately. I earn under the US income threshold and when doing an FX conversion I've earned roughly $85,000 USD. Could someone please let me know what I am doing wrong? It shows that I am able to claim my daughter as a dependent, so I'd like to be compensated for this. Thanks!

[Lisa995]

The child tax credit isn't necessarily refunded, it only reduces tax liability….if you excluded all your income and have no tax liability, you've got nothing left to apply the credit against.

[jjgrant]

I was under the impression you received this as a refund and not as a credit to be used against any owed taxes. I pay 40% tax on my earned wages in the UK, therefore I do not have any tax liability.

[Hal_Al · Accepted solution]

People who use Married Filing Separately (MFS)  are not eligible for the Earned Income Credit. Your income is too high for EIC, so that statement is mostly for others reading this post.

The child tax credit  (CTC) is  limited to your tax liability. The CTC is a non-refundable credit and can only reduce your income tax to 0, It can not help you beyond eliminating your tax liability.

 But, if you have more than $2500 of earned income, some or all of it is usually given back to you thru the "Additional Child tax credit" (ACTC)**.  However earned income excluded under the foreign income exclusion does not count for the ACTC.

**That is, part of the CTC may be on line 17 of form 1040 instead of line 12.   The  ACTC is calculated on form 8812 and  is basically 15% of your earned income over $2500. The ACTC is a maximum of $1400 per child (not $2000).