“Can I use my Kollel stipend to qualify for the Child Tax Credit refund?”

“Can I use my Kollel stipend to qualify for the Child Tax Credit refund?”

Almost every week or two, I get that exact question from U.S. citizens in Israel.

The answer in almost all cases is no, and the reason has nothing to do with religion. It’s about the IRS definition of earned income.

To qualify for the refundable Additional Child Tax Credit, your income must be compensation for services performed. 

That means:

A clear role with specific, measurable duties.

Supervision or accountability.

Pay that depends on actually doing the work.

Most kollel stipends don’t meet this test because:

There’s no formal job description - “Avreich in Kollel” doesn’t tell the IRS what services you provide to the institution.

Payment isn’t tied to duties - the stipend continues even if you aren’t mentoring, teaching, or giving shiurim that month.

The purpose is mission support - sustaining full-time learning, not hiring labor for defined tasks.

The IRS treats this much like it treats many Christian missionary stipends: valuable for the mission, but not “earned income” for refundable credits.

In fact, around 2010, when many Jewish families in Israel were being audited over Kollel stipends and Child Tax Credit claims, Christian missionaries were being audited for the exact same reason - lack of a defined, compensable service role.

By contrast, a university researcher’s stipend usually counts:

Duties are documented in an appointment letter.

Performance is monitored.

Pay stops if duties stop.

That’s why a research stipend can qualify for the Child Tax Credit (and the Foreign Earned Income Exclusion), but a typical Kollel stipend often cannot.

While technically a W-2 or foreign equivalent is not required to be issued for such to be considered earned income, many institutions which offer scholarships with clearly defined roles do issues them to be 100% compliant even if by the letter of the law it's not required.

Bottom line: If your family depends on the refundable Child Tax Credit, the issue with Kollel stipends isn’t the religious nature of the work - it’s how the role is structured. 

Defined duties, accountability, and performance-based pay can make all the difference between qualifying or not.