Can You Claim the Earned Income Tax Credit While Living Abroad?

According to the IRS, you can claim the Earned Income Tax Credit (EITC) as an American living abroad, but only if you lived in the United States for more than half the tax year and don’t claim the Foreign Earned Income Exclusion. This means the EITC is primarily available to Americans who moved abroad mid-year, returned home partway through the year, or split their time between the US and another country.

The EITC is one of the most valuable refundable tax credits available, worth up to $8,046 for families with three or more children in 2025. But for most full-time expats, the residency requirement and the conflict with Form 2555 make this credit unavailable. We’ll show you exactly who qualifies, what the requirements are, and alternative tax strategies that might work better for your situation.

What Is the Earned Income Tax Credit?

The EITC is a refundable tax credit designed to help low- to moderate-income workers reduce their federal tax burden. For the 2025 tax year (filed in 2026), the credit ranges from $649 for workers without qualifying children to $8,046 for families with three or more qualifying children.

Unlike a deduction that reduces your taxable income, a tax credit reduces your tax bill dollar-for-dollar. Even better, the EITC is refundable. This means if the credit exceeds your tax liability, you’ll receive the difference as a refund.

2025 Maximum Credit Amounts:

• No qualifying children: $649
• One qualifying child: $4,328
• Two qualifying children: $7,152
• Three or more qualifying children: $8,046

Many expats underestimate this credit because they assume it’s only for domestic taxpayers. The truth is more nuanced. Your eligibility depends entirely on where you physically lived during the tax year and which tax strategies you’re using.

What Are the Two Requirements That Limit Most Expats?

To claim the EITC, you cannot file Form 2555 (Foreign Earned Income Exclusion), and you must have lived in the United States for more than half the tax year. These two requirements immediately disqualify most Americans living abroad full-time.

Why Form 2555 Disqualifies You

The Foreign Earned Income Exclusion allows you to exclude up to $130,000 of foreign earned income from US taxation for the 2025 tax year. It’s one of the most powerful tax benefits available to expats. However, the IRS specifically prohibits claiming both the FEIE and the EITC on the same tax return.

This creates a dilemma: Most expats living abroad full-time rely on Form 2555 to reduce or eliminate their US tax liability. Choosing not to claim it to qualify for the EITC rarely makes financial sense, especially for those earning above the EITC income thresholds.

The US Residency Requirement

Without qualifying children, you must have lived in the United States for more than half the tax year to claim the EITC. The United States comprises the 50 states, the District of Columbia, and U.S. military bases, but does not include U.S. territories such as Guam, the Virgin Islands, or Puerto Rico.

If you have qualifying children, they must also have lived with you in the United States for more than half of the year.

Who Can Qualify for EITC as an Expat?

While the EITC is limited for most expats, certain situations make you eligible:

Soon-to-Be Expats: Moved Abroad Mid-Year

Sarah worked in California from January through August, earning $45,000. In September, she moved to Spain for a new job. Because she lived in the US for more than half of 2025 (8 months), she may be eligible to claim the EITC for that tax year.

However, Sarah would need to choose between the EITC and the FEIE. If her Spanish income was minimal after moving, claiming the EITC on her US income might make more sense than claiming the FEIE.

Emotional Returners: Moved Back to the US Mid-Year

Marcus lived in Germany until June 2025, then returned to the US permanently. He lived in the US for 7 months (more than half the year). Marcus earned a total of $55,000 for the year, with $25,000 earned in Germany and $30,000 earned after returning to the US.

Marcus could choose not to claim the FEIE and instead file a regular return claiming the EITC. He’d pay US tax on his German income but might receive an EITC refund that offsets that tax, especially if he paid German taxes that he can claim as Foreign Tax Credits.

Part-Time Expats: Split Time Between Countries

Jessica teaches English in South Korea but returns to the US every year for 7 months to work at summer camps and visit family. Because she maintains US residency for more than half the year, she qualifies for the EITC without the Form 2555 restriction, as long as she doesn’t claim the FEIE.

Military Members Stationed Abroad

Special rules apply to military personnel. US military bases count as part of the United States for EITC residency purposes. Service members stationed abroad can claim the EITC even while living on foreign military bases.

What Are the Basic EITC Eligibility Requirements?

Beyond the residency and Form 2555 restrictions, you must meet these requirements:

Income Limits for 2025 Tax Year:

• Investment income must be $11,950 or less
• Total earned income must fall below specific thresholds based on filing status and number of children

Required Documentation:

• Valid Social Security Number for you, your spouse if filing jointly, and any qualifying children, issued on or before the due date of your tax return, including extensions
• You must be a US citizen or resident alien all year
• Cannot file as Married Filing Separately (with limited exceptions)

Qualifying Child Requirements: 

If claiming children for the EITC, each child must:

• Be your child, grandchild, sibling, or stepchild
• Be under age 19 (or under 24 if a full-time student)
• Have lived with you in the United States for more than half the year
• Not having provided more than half their own support

Use the IRS EITC Assistant to see if you qualify and estimate your credit amount.

What Are Better Tax Strategies for Full-Time Expats?

If you live abroad full-time, the EITC likely isn’t available to you. The good news? You have access to other powerful tax benefits that can reduce or eliminate your US tax liability.

Foreign Earned Income Exclusion

The FEIE allows you to exclude up to $130,000 of foreign earned income for the 2025 tax year. This is nearly always more valuable than the EITC for expats earning above the poverty line.

Example: Thomas lives in Thailand and earns $75,000 teaching at an international school. If he uses the FEIE, he can exclude all $75,000 from US taxation, resulting in $0 US tax owed. If he tried to claim the EITC instead, he’d pay US tax on the full $75,000 and might receive a few thousand dollars back through the EITC. The FEIE is clearly the better choice.

Foreign Tax Credit

The Foreign Tax Credit is especially valuable for expats in high-tax countries. It provides a dollar-for-dollar credit for foreign taxes paid to your country of residence.

Example: Elena lives in France and earns $90,000 per year. France taxes her $28,000. Her US tax on that same income would be $18,000. Using the Foreign Tax Credit, she can offset her entire US tax liability and carry forward the excess $10,000 credit to future years.

Critical advantage over EITC: Unlike the FEIE, the Foreign Tax Credit doesn’t prevent you from claiming the refundable portion of the Child Tax Credit, which can be worth up to $1,700 per child.

Combining Strategies for Families

Many expat families find that using the Foreign Tax Credit instead of the FEIE allows them to claim the valuable Additional Child Tax Credit, which can provide significant refunds.

Strategic example: David and Lisa live in Canada with two young children. They earn $110,000 combined. Instead of using the FEIE, they:

• Claim Foreign Tax Credits for Canadian taxes paid (approximately $25,000)
• Reduce their US tax to $0
• Claim the refundable Additional Child Tax Credit ($3,400 total for two children)
• Receive a $3,400 refund even though they owed $0 in US tax

This strategy provides more value than the EITC ever could for their situation.

What If I Moved Mid-Year?

Mid-year moves create unique opportunities and challenges. You’ll need to calculate:

• Days in the US vs abroad: Count carefully where you physically were for more than half the year. The IRS counts partial days based on where you spent the majority of each day.
• Earned income by location: Income earned while physically working in the US cannot be excluded under the FEIE, even if you qualify for the FEIE overall.
• Prorated FEIE: If you moved abroad partway through 2025, your FEIE must be prorated based on the number of qualifying days abroad.

Strategic decision: Compare the tax outcome of claiming the EITC on your US-earned income versus using the prorated FEIE and Foreign Tax Credits on your foreign income.

What Common Mistakes Should I Avoid?

• Claiming both FEIE and EITC: You cannot claim both on the same tax return. The IRS will reject your return or disallow one of the credits.
• Assuming US territories are included: Puerto Rico, Guam, and the US Virgin Islands are not considered part of the United States for EITC residency purposes.
• Forgetting about state taxes: Some states continue to tax residents even after moving abroad. Your state tax situation may impact whether the EITC is a good option.
• Not considering carryforward rules: If you revoke the FEIE to claim the EITC, you cannot claim the FEIE again for five years without IRS approval.
• Missing the filing deadline: The automatic June 15 extension for expats applies, but any tax owed is still due April 15.

Should I Choose EITC Over FEIE?

For most full-time expats, the answer is no. The FEIE and Foreign Tax Credit provide significantly more value. However, consider the EITC if:

• You earned a relatively low income abroad (under $25,000)
• You moved back to the US mid-year and lived in the US for more than half the year
• You have multiple qualifying children and earned income below the EITC phaseout thresholds
• You haven’t claimed the FEIE in previous years (so there’s no five-year lockout)

Always calculate both scenarios: Work with a tax professional to compare your total tax liability under each approach before making this decision.

What Should My Next Steps Be?

• If you moved abroad or returned to the US this year: Calculate exactly how many days you lived in each country. If you were in the US more than half the year, the EITC might be worth exploring.
• If you’re planning a move: Consider the timing. Moving early in the year (before June 30) means you won’t qualify for the EITC that year. Moving later maintains your eligibility.
• If you live abroad full-time: Focus on maximizing the FEIE, Foreign Tax Credits, and the Child Tax Credit instead of the EITC. These provide significantly more value for your situation.
• If you have qualifying children: Run the numbers comparing Foreign Tax Credit (which preserves the refundable Child Tax Credit) versus the FEIE plus EITC (which you can’t combine).
• If you’re behind on filing: The Streamlined Filing Compliance Procedures offer a penalty-free path to catch up, regardless of which credits you qualify for.

How Greenback Can Help

No matter how late, messy, or complex your return may be, we can help. Greenback is an American company founded in 2009 by US expats for expats. We focused exclusively on expat taxes and always have. Many of our CPAs and Enrolled Agents are expats themselves, and because they live in 14 time zones, they experience firsthand the challenges of living abroad.

Whether you’re trying to determine if you qualify for the EITC, need help calculating the best strategy for your mid-year move, or want to explore whether Foreign Tax Credits or the FEIE makes more sense for your family, our expat tax experts can guide you.

Have questions about the process or next steps? Contact us, and one of our Customer Champions will happily address all your concerns. If you need very specific advice on your tax situation, you can also book a consultation with one of our expat tax experts.

This article is for informational purposes only and does not constitute personalized tax advice. Tax laws are complex and subject to frequent changes. For advice tailored to your specific situation, consult a qualified tax professional.