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Advance Payments of the Child Tax Credit & Expats

My client should be eligible for a $3,000 child tax credit for 2021. She lives and works outside of the US. Her US taxes will be covered by her foreign tax credit.  As I understand it, for expats,  $1,600 of the child tax credit can be used against her tax liability and the other $1,400 is refundable.

She uses a family member's US address on her return as getting mail is, at best, slow and difficult with a foreign address or at worst does not get delivered at all.  However, I always mark her return that she lives in a foreign country.

She received a letter that she "may" be eligible for advance payments - which you're not supposed to get if you live outside the US for over 6 months.  I know she can opt out of getting them but that's not likely to happen.

If she gets the advance payments and then later files the return, what happens?  Will the advance payments reduce the $1,600 nonrefundable portion of the credit first and then $200 will come out of the $1,400 refundable part?  Or will they reduce the $1,400 refundable part and she'll owe $400?  Something else?

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qbteachmt
Level 15

Here is a good article to read, and send the link to your client:

https://www.hrblock.com/expat-tax-preparation/resource-center/filing/credits/child-tax-credit-abroad...

Because this part: "I know she can opt out of getting them but that's not likely to happen."

Needs to come to some conclusion.

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