Child tax credit requirements under the One Big Beautiful Bill Act: Impact on Americans abroad
The One Big Beautiful Bill Act supercharges the Child Tax Credit – yet slips in stricter Social Security Number rules that can block expat families from claiming it. This quick-start guide breaks down what’s permanent, what’s temporary, and why mixed-status households abroad now face tricky filing choices.
If you’re a US citizen raising kids overseas – especially with a non-citizen spouse – these insights will show you how to keep (or regain) your CTC benefits.
Overview of CTC changes in the final law
Permanent extensions
- Makes permanent the doubled child tax credit of $2,000 per child, maintains the increased income phase-out thresholds, and maintains the nonrefundable, non-child dependent credit.
- Permanently indexes the credit amount for inflation beginning after 2026 (rounded down to the nearest $100).
Temporary provision
Increases the child tax credit to $2,500 per child for tax years 2025 through 2028.
New Social Security Number requirements
The requirement of the child's SSN for purposes of claiming the credit is maintained and expanded upon to require the taxpayer's SSN and, for joint filers, the spouse's SSN in order to claim the credit.
Practical implication:
A married couple filing jointly, where the non-US spouse has an ITIN in lieu of an SSN, cannot claim the credit for the child. ITINs are US tax identification numbers issued by the IRS explicitly for individuals without work authorization.
Also read. Form W-7: ITIN application guide
Specific impact on Americans living abroad
The dual national family challenge
In married-parent households, while some descriptions say "both parents" need SSNs, others specify that only the parent or guardian opening the account must be SSN-qualified. So it's still not 100% clear.
Practical scenarios for expat and dual-national families
- Married Filing Jointly with Non-Resident Spouse: If the parents are married filing jointly, and the non-resident spouse does not have a US SSN, then their child will likely not be eligible.
- Head of Household Filing: The child of dual-national parents whose US citizen parent (has a SSN) files as Head of Household would be eligible.
- Married Couple Living together in the US with Non-Resident Spouse: Child Credit is not possible. Head of Household status is not allowed for a couple living together in the US. Married filing separately filing status does not qualify for Child Credit in general.
Work eligible Social Security Number definition
What qualifies as "work eligible"
- Must be a standard Social Security Number issued by the Social Security Administration.
- Individual Taxpayer Identification Numbers (ITINs) do not qualify.
- Adoption Taxpayer Identification Numbers (ATINs) do not qualify.
Challenges for mixed-status families abroad
- Non-citizen spouses living abroad may not have work-eligible SSNs.
- Creates filing status decisions that could affect overall tax liability.
- May incentivize separate filing arrangements.
Additional CTC provisions in the final law
The Special Income Treatment allows for the election to treat income from a 501(d) organization as earned income for purposes of the CTC.
Temporary enhancements:
- Higher credit amounts ($2,500) available through 2028
- Standard credit amounts ($2,000) are permanent thereafter
- Inflation indexing begins after 2026
Planning considerations for Americans abroad
When planning your US tax return from abroad, carefully evaluate whether filing jointly as a married couple or as head of household offers the most benefits under the new Child Tax Credit rules. Consider the broader tax implications of each filing status, including eligibility, tax rates, and access to refundable credits. Ensure you have proper documentation confirming work-eligible SSN status for both the taxpayer and any dependents to avoid disqualification.
New CTC brings relief – and roadblocks: Let tax experts guide you
While the OBBB preserved and enhanced the Child Tax Credit permanently, the new SSN requirements create significant compliance challenges for American families abroad, particularly those with non-citizen spouses who may not have work-eligible Social Security Numbers.
Taxes for Expats specializes in helping Americans abroad navigate exactly these complexities, ensuring you're not leaving credits or refunds on the table. Whether you're filing jointly or separately, our experts will guide you to the best strategy – book a free consultation call today to secure your CTC eligibility and optimize your return.
FAQ
Only if the filing parent and spouse both have work-eligible SSNs; otherwise, the credit is disallowed when filing jointly. The Head of Household option will enable the credit, but the HOH status is not allowed if the couple lives together in the US.
No, ITINs are not considered work-eligible and do not meet the SSN requirement for claiming the credit.
Expats should compare eligibility, credit access, and tax rates under both statuses to optimize benefits under the new rules.
