The Overlooked Credit for Indian Families
Many Indian families in the U.S. miss out on thousands of dollars in Child Tax Credits (CTC) simply because their CPA or preparer lacks in-depth knowledge of U.S. immigration, residency, and cross-border tax laws. Some fail to claim it due to dependent ITIN status, visa confusion, or misunderstanding IRS rules.
At Kewal Krishan & Co, we work with Indian families living in the U.S. to uncover every tax benefit available including the Child Tax Credit. When properly claimed, this credit can result in over $2,000 per eligible child. Let’s break down the rules.
IRC Code Reference
The Child Tax Credit is governed by IRC §24, which allows up to $2,000 per qualifying child, with refundable portions known as the Additional Child Tax Credit (ACTC).
IRS Forms to Use
- Form 1040 U.S. Individual Income Tax Return
- Schedule 8812 Credits for Qualifying Children and Other Dependents
- Form W-7 For applying ITINs for dependents if needed
Example Scenario
Example: Arjun, an H-1B visa holder, lives in Texas. His wife and two kids (ages 8 and 4) are in the U.S. on H-4 dependent visas. The children don’t yet have SSNs but have ITINs.
- Can he claim Child Tax Credit?
No, not in this case SSNs are mandatory for the refundable portion of CTC per IRS guidelines. - Fix: Apply for SSNs if the children are eligible. If not eligible, they may only qualify for Credit for Other Dependents, which offers a $500 nonrefundable credit.
Step-by-Step: How to Claim the Child Tax Credit
- Confirm residency status Ensure you’re filing as a U.S. tax resident using the Substantial Presence Test or green card test.
- Apply for dependent SSNs ITINs are not sufficient for refundable CTC.
- File Form 1040 Not 1040-NR. NR filers cannot claim dependent credits.
- Attach Schedule 8812 Use this to calculate the allowed credit.
- Consider Form 1116 If foreign taxes paid apply and offset the CTC.
- Check phaseouts The CTC phases out for AGI above $400,000 (MFJ) or $200,000 (single).
- File electronically E-file to speed up IRS processing.
Conclusion
Claiming Child Tax Credit with Indian dependents depends largely on SSN eligibility, visa status, and filing the correct forms. If you’re filing 1040-NR, or your children only have ITINs, you may miss out. Strategic planning ensures this tax credit doesn’t go unclaimed.
Call to Action
Tax laws for Indian families in the U.S. are complex and often misunderstood. Anshul Goyal, CPA EA FCA is a licensed Certified Public Accountant in the United States, admitted to practice before the IRS as an Enrolled Agent, and an expert in cross-border taxation for American businesses and Indian individuals.
Let us help you claim every dollar you deserve.
About Our CPA
Anshul Goyal, CPA EA FCA is a U.S. Certified Public Accountant, Enrolled Agent, and a Fellow Chartered Accountant. He leads a team at Kewal Krishan & Co. that specializes in IRS compliance for Indian H-1B holders, NRIs, and cross-border families. His practice spans both U.S. and Indian tax jurisdictions.
Disclaimer
This blog is for informational purposes only and does not constitute legal or tax advice. Child Tax Credit eligibility varies based on immigration, SSN, and tax residency status. For personalized advice, consult a licensed CPA familiar with both U.S. and Indian tax systems.
Top 5 FAQs
1. Can I claim Child Tax Credit with ITIN dependents?
No. SSNs are required for the refundable portion of CTC.
2. Does my visa status impact eligibility?
Yes. Non-resident aliens (filing 1040-NR) cannot claim the credit.
3. What if my child lives in India?
The child must live with you for more than half the year in the U.S.
4. Can H-4 visa dependents get SSNs?
Yes, only if they have work authorization (EAD). Otherwise, they qualify only for ITIN.
5. What’s the max I can get per child?
Up to $2,000 per child, with $1,600 refundable in 2025 if eligible.