Understand dependents and deductions

If you’re a U.S. expat parent living in Hong Kong, China, or Macau, figuring out dependents and tax deductions can feel like a daunting task. Fortunately, the IRS offers clear guidelines on who qualifies as a dependent and how you can maximize relevant tax benefits. Knowing these rules empowers you to lower your taxable income and potentially save thousands of dollars each year.

Qualifying child vs. qualifying relative

The IRS recognizes two types of dependents:

  • Qualifying child: Must meet specific relationship, residency, age, and support tests. Children generally qualify if they are your son, daughter, stepchild, foster child, brother, sister, or a descendant of any such relative, live with you for more than half the year, are under age 19 (or under 24 if a full-time student), and do not provide over half of their own support.
  • Qualifying relative: Typically parents, domestic partners, or other extended family members (including in-laws) who meet IRS relationship requirements, have gross yearly income under $5,200 in 2025, and receive more than half their financial support from you.

Even if you move abroad, you may still claim these dependents on your U.S. return, as long as the tests are satisfied. For more guidance on eligibility, learn about claiming dependents on taxes.

Why it matters

Claiming dependents can significantly reduce your taxable income and open the door to various credits and deductions. As an expat parent, you may also benefit from provisions like the Foreign Earned Income Exclusion or certain tax treaties, increasing your overall tax savings.

Meet child tax credit rules

The Child Tax Credit (CTC) can substantially cut your federal tax bill. For the 2025 tax year, it can be up to $2,200 per qualifying child, with up to $1,700 potentially refunded if you owe no tax. There is also a $500 Credit for Other Dependents (including older children and parents) if they meet specific criteria.

Key eligibility requirements

  • Age: Children must be 16 or younger at the end of the tax year.
  • Relationship: Must be your son, daughter, stepchild, foster child, sibling, or descendant of these relatives.
  • Support: The child cannot provide more than half of their own support.
  • Unique filer: The child can’t be claimed by more than one taxpayer.
  • Tax identification: A valid Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) is required.

If you want to dive deeper into limits, check out the child tax credit income limits and child tax credit eligibility criteria.

Claiming the credit from abroad

You can claim the CTC while living overseas. Just remember that you’re still subject to U.S. tax filing requirements. The credit may help balance out any U.S. tax due on foreign income.

Obtain SSNs or ITINs abroad

Children born outside the U.S. often need a tax identification number if you plan to include them on your U.S. tax return. The IRS generally requires each dependent to have either an SSN (if they are U.S. citizens) or an ITIN (if they are not eligible for an SSN).

Determining which ID you need

  • SSN: Typically for U.S. citizens or permanent residents.
  • ITIN: For non-citizens who don’t qualify for an SSN but need to file a U.S. tax return or be claimed as a dependent.

Applying for your child

You can apply for an ITIN by submitting Form W-7 along with original or certified supporting documents, such as a birth certificate or passport, to the IRS. If your child is a U.S. citizen, you can contact a U.S. embassy or consulate for help obtaining an SSN. These steps can take time, so start the process well before the tax filing deadline.

File taxes from overseas

Your U.S. tax obligations don’t end when you move abroad. As an expat parent, you’re typically still required to file an annual return if your income exceeds certain thresholds. Fortunately, you may be eligible for the Foreign Earned Income Exclusion and foreign tax credits, reducing potential double taxation.

Essential steps for expat returns

  1. Gather all foreign and U.S. income documentation, including wages, foreign bank statements, and investment details.
  2. Determine if you meet filing thresholds. For instance, if your worldwide income surpasses the standard deduction (currently $15,750 for single filers in 2025), you usually must file.
  3. Claim any applicable deductions or credits, like the Child Tax Credit or Credit for Other Dependents.
  4. Complete required forms, such as Form 2555 for the Foreign Earned Income Exclusion, if you qualify.

If you need more details on potential credits, check out tax credits for families abroad and tax benefits for expatriate families.

Potential pitfalls

  • Missing deadlines: Filing late can lead to penalties.
  • Overlooking foreign assets: You may need to file extra forms if you hold bank accounts or investments overseas.
  • Providing incorrect dependent information: Ensure you have full names, birthdates, and SSNs/ITINs for any dependents you claim.

Review common questions

Do I need a U.S. tax return if someone else claims my child?

You might. Even if your spouse or a family member claims your child as a dependent, you could still have to file your own U.S. return if your personal income meets the threshold. Rules vary depending on your marital status and total earnings. For more insight, see dependents and tax filing requirements.

Can my child earn unlimited income?

Yes, if you’re claiming them as a qualifying child. The IRS does not cap a qualifying child’s income level, but the child must not pay for more than half of their own support. If you’re claiming a qualifying relative instead, that person’s gross income must stay below $5,200 in 2025.

Is it worth applying for the Child Tax Credit if I live abroad?

For many expat parents, the additional paperwork is well worth it. This credit can shave thousands off your tax bill and may ultimately be refunded if the credit exceeds your tax liability. Learn more at child tax credit 2024.

Remember key takeaways

  • A dependent can be either a qualifying child or a qualifying relative. Check age, relationship, support, and income tests carefully.
  • The Child Tax Credit can significantly reduce your U.S. tax bill, even if you live in Hong Kong, China, or Macau.
  • You must secure SSNs or ITINs for dependents to claim them on your return.
  • Filing is still mandatory for expats if you exceed income thresholds. Take advantage of exclusions and credits if you qualify.

Need more personalized guidance to navigate dependents and tax deductions? At American Pacific Tax, we specialize in helping U.S. expat families stay compliant and maximize their benefits. Our friendly team is here to guide you every step of the way so you can focus on what truly matters—your family. Feel free to reach out for tailored advice on your specific situation.