I’m a 100% disabled veteran abroad. Only income is VA disability. I have wife & 3 kids plus adult disabled son. Can I file to claim child tax credits?

[blrhoden]

My name is Brad, I am a 100% disabled U.S. military veteran and have been rated since 2016. I live outside the U.S. with my wife and children. We have a 2-year-old, a 6-year-old, a 15-year-old, and I also care for my adult disabled son. All of my income comes from VA disability compensation (about $65,670/year), which I understand is non-taxable. I do not receive SSDI or military retirement pay. Because we live in Jamaica, we pay out of pocket for medical care (about $300/month for me and $150/month for my family). My question is: • Am I eligible to file a U.S. federal tax return even though all of my income is VA disability? • If so, would I qualify for child tax credits (the $2,000 per child credit) even though my children do not currently have Social Security Numbers? • If they need ITIN numbers instead, where do I apply for ITINs for my wife and children? I want to confirm whether filing could allow me to claim dependents and receive any refundable credits.

[Hal_Al]

Q. My only income is (non taxable) VA disability. I have wife & 3 kids plus adult disabled son. Can I file to claim child tax credits?

A. No. 

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.  So, if you have no taxable income and no federal income tax, you get no child tax credit.

If you have more than $2500 of earned income, some or all of  the CTC can be claimed thru the "Additional Child tax credit".  The  ACTC is   is basically 15% of your earned income over $2500. The ACTC is a maximum of $1700 (2024)  per child, not $2000.  But VA disability is not qualify as  earned income, so you can not claim that.

Furthermore, to claim the refundable portion (Additional Child Tax Credit), the taxpayer's main home must have been in the United States for over half the tax year.