Child Benefits in Germany
In 2026, German residents receive €250 per month per child as 'Kindergeld.' For US expats, the good news is that the IRS generally views these payments as social welfare or 'gifts' from a foreign government, which are not included in gross income. However, if the benefit is technically a 'tax refund' (Kinderfreibetrag) used to offset German income tax, it may reduce the amount of Foreign Tax Credit (FTC) you can claim. Check your 'Steuerbescheid' from the BZSt to see which was applied.
The US Child Tax Credit
Receiving Kindergeld does not disqualify you from claiming the US Child Tax Credit, potentially allowing for a dual benefit for your family.
Interplay of Benefits
While Kindergeld is non-taxable, you must still ensure your children have a US Social Security Number to claim the US credit. LSI keywords include 'Familienkasse,' 'Kinderfreibetrag,' 'Form 1040,' 'Social Welfare Exclusion,' and 'Schedule 8812.' The formula for your total child-related tax benefit is: $$Benefit_{Total} = Kindergeld_{EUR} + Child\\ Tax\\ Credit_{USD}$$. Note that if you use the Foreign Earned Income Exclusion (FEIE), you may lose the refundable portion of the US credit. Refer to IRS Publication 501. For those with high income, the German tax office may automatically apply the 'Kinderfreibetrag' (tax allowance) instead of Kindergeld if it results in a higher benefit, which *does* impact your creditable German tax on Form 1116.