If you are a US expat parent living in Hong Kong, China, or Macau, claiming dependents on taxes can feel overwhelming. However, once you understand the rules, you will see how dependents can significantly lower your tax bill. This guide will walk you through IRS definitions, Child Tax Credit essentials, and the practical steps you need to take so your family can benefit from any eligible credits and deductions.

Understand how dependents reduce taxes

Claiming dependents directly lowers the amount of your taxable income. The IRS defines two dependent categories: qualifying children and qualifying relatives. Each type must meet certain criteria related to age, income, residency, and support. When you properly claim a dependent:

  • You can potentially access valuable family-focused tax credits, like the Child Tax Credit.
  • You might qualify for additional deductions that reduce your taxable income.
  • You stay compliant with US tax laws even while living abroad.

The basics of becoming a dependent

  1. Passing the age test: Qualifying children must generally be under 19, or under 24 if they are full-time students.
  2. Meeting the residency test: They typically need to live with you for more than half the year.
  3. Satisfying the support test: You must provide more than half of their financial support, or follow a multiple support agreement if multiple people contribute.
  4. Filing separately: A child cannot file a joint tax return with someone else unless it is solely to claim a refund of withheld taxes.

Master the rules for qualifying children and relatives

Depending on your situation, dependents can be your children, stepchildren, foster children, younger siblings, or even elderly parents. Make sure the individual you wish to claim has not already been claimed as a dependent on someone else’s tax return. Also note the unique rules for qualifying relatives:

  • Gross income limit: If you are claiming a relative as a dependent, they must remain below an annual gross income threshold (for example, under $5,200 for 2025).
  • Relationship criteria: Qualifying relatives can include parents, in-laws, or siblings, provided you meet the relationship or household member requirements.

Learn to claim the child tax credit

For parents, the Child Tax Credit can be a substantial benefit, reducing your total tax owed dollar-for-dollar. To qualify, your child must generally be under age 17 at the end of the tax year and meet specific residency and support tests. Because you live abroad, additional rules may apply when calculating your modified adjusted gross income.

Obtaining SSNs or ITINs

A common hurdle for US citizens abroad is securing a valid US Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN) for the child you want to claim. The IRS requires a taxpayer identification number for each dependent before you can claim them. This process often involves:

  • Visiting the US Embassy or a local agency authorized to process SSN applications.
  • Submitting certified documents, such as birth certificates and passports.

Explore overseas filing steps

Because the IRS discontinued Form 1040EZ, you will generally file using Form 1040 or 1040-SR to claim dependents. Living in Hong Kong, China, or Macau, you may also have additional items to consider, such as potential foreign tax credits or the Foreign Earned Income Exclusion. You want to make sure you stay on top of:

FAQs

  1. Do I still need to file my own tax return if I am claimed as a dependent?
    Yes. Even if someone else can claim you, you may still need to file your own return based on your income, marital status, or other IRS rules.

  2. Can I claim a dependent who is not a US citizen?
    Possibly, if they meet the substantial presence or residency requirements and you secure the appropriate SSN or ITIN for them.

  3. What if I only provide partial support for my elderly parent?
    You can use a multiple support agreement if you and other siblings collectively provide more than 50 percent of that parent’s support. Each person contributing 10 percent or more could claim the parent, but only one sibling actually takes the exemption in a given year.

  4. How do I keep track of the income threshold for qualifying relatives?
    The amount is updated by the IRS, so check the latest guidance for the current figure. For 2025, the gross income limit for a qualifying relative is $5,200.

Key takeaways

  • Claiming dependents on taxes lowers your taxable income and can unlock valuable credits.
  • Distinguish between qualifying children and qualifying relatives, and be sure to meet IRS definitions.
  • Living outside the US means you may face extra steps, like getting your child an SSN or ITIN.
  • The Child Tax Credit offers significant savings, but you need to keep up with the latest rules and limits.
  • Ensure only one person claims each dependent. If there is shared custody or multiple support, follow IRS regulations on who qualifies to claim them.

Ready to make this process stress-free and ensure you are maximizing all available credits? Our team at American Pacific Tax will guide you through each step, from verifying dependent eligibility to filing the necessary forms correctly. Reach out for personalized help and get peace of mind that you and your family are in full compliance.