The Additional Child Tax Credit is a refundable portion of the regular Child Tax Credit

The Additional Child Tax Credit (sometimes called the Refundable Child Tax Credit) is money the IRS sends back to you if your Child Tax Credit is larger than the income tax you owe. Think of it this way: the regular Child Tax Credit reduces what you owe, but if that credit is bigger than your tax bill, the Additional Child Tax Credit lets you keep the difference as a refund instead of losing it.

The regular Child Tax Credit is worth up to $2,000 per may have access to child under age 17. But not all of that $2,000 is refundable. The Additional Child Tax Credit makes up to $1,700 of it refundable for the 2023 tax year (this amount changes yearly based on inflation). This matters most to lower-income families, because they often owe little or no federal income tax but still have children who may have access to for the credit.

You claim the Additional Child Tax Credit on Form 1040 (your main tax return) using Schedule 8812. The IRS calculates it automatically if you meet the rules, but you have to file a return to receive it — even if you had no income or your income was too low to normally require filing.

Key Takeaways

  • The Additional Child Tax Credit is refundable money from the IRS, sent to you when your Child Tax Credit exceeds the tax you owe.
  • Up to $1,700 per may have access to child can be refundable for the 2023 tax year, with the amount adjusted each year for inflation.
  • You must file a tax return and use Schedule 8812 to claim it, even if you had no income or very low income.
  • The credit phases out for higher earners, and your earned income (wages, self-employment) sets a floor for how much you can claim.

How the refundable and non-refundable portions work together

The Child Tax Credit has two parts: non-refundable and refundable. The non-refundable portion reduces your tax bill dollar-for-dollar up to the amount you owe. Once your tax bill hits zero, any remaining credit becomes the Additional Child Tax Credit — and that is the part the IRS refunds to you.

Here is a concrete example: suppose you have two may have access to children and owe $1,200 in federal income tax. Your total Child Tax Credit is $4,000 ($2,000 per child). The first $1,200 of the credit wipes out your tax bill. You have $2,800 left over. The IRS can refund up to $1,700 per child (so $3,400 total for two children), but you only have $2,800 remaining, so you receive a $2,800 refund.

Now suppose you owe $0 in tax and have two may have access to children. Your entire $4,000 credit is potentially refundable, but the limit is $1,700 per child ($3,400 total). You would receive a $3,400 refund. The remaining $600 of the credit is lost.

Income limits and how earned income affects your claim

Your earned income sets a floor for the Additional Child Tax Credit. Earned income means wages from a job, net self-employment income, or other compensation you received for work. The IRS will not refund more than 15% of your earned income above $2,500 (for 2023; this threshold adjusts yearly).

For example, if your earned income is $10,000, the calculation is: ($10,000 − $2,500) × 15% = $1,125. Even if you have two children and could claim $3,400 in Additional Child Tax Credit, you can only receive $1,125 because that is what your earned income allows.

The credit also phases out for higher earners. Once your modified adjusted gross income (MAGI) exceeds $400,000 (married filing jointly) or $200,000 (single, head of household, or married filing separately), the credit begins to reduce by $50 for each $1,000 over the threshold. This phase-out applies to both the regular and additional portions of the credit.

Who qualifies as a dependent child for this credit

A child must meet several conditions to count toward the Additional Child Tax Credit. The child must be under age 17 at the end of the tax year, be your son, daughter, stepchild, foster child, sibling, or descendant of any of these (such as a grandchild or niece), and have a valid Social Security number. The child must also have lived with you for more than half the tax year and be a U.S. citizen, national, or resident alien.

You must claim the child as a dependent on your return, and you must be the child's parent or legal guardian (or in some cases, another relative). If two people could claim the same child, only one of you can actually claim them. The IRS uses a tiebreaker rule: generally, the person who had the child live with them for the longest time in the year wins the right to claim the credit.

A child who is married and files a joint return with a spouse cannot be claimed as your dependent, and therefore cannot count toward your Additional Child Tax Credit.

How to claim the Additional Child Tax Credit on your return

You claim the Additional Child Tax Credit by filing Form 1040 and attaching Schedule 8812. On Schedule 8812, you enter information about each may have access to child: their name, Social Security number, and relationship to you. The form then walks you through the calculation based on your earned income and tax liability.

If you use tax software, the program usually handles Schedule 8812 automatically once you enter your children's information and your income. If you file by hand or with a tax professional, make sure they know you want to claim the Additional Child Tax Credit — it does not happen unless you specifically request it or file the schedule.

You must file your return by the normal important date (usually April 15) or claim an extension to receive the refund. The IRS processes refunds over several weeks; if you file electronically and choose direct deposit, you may receive your refund faster than if you request a paper check.

Why some families receive the full credit and others receive less

The amount you actually receive depends on three things: how many may have access to children you have, how much tax you owe, and how much earned income you reported. A family with high earned income and low tax liability might receive the full $1,700 per child. A family with very low earned income might receive much less, even if they have no tax liability, because the 15% earned-income calculation limits them.

Families with no earned income cannot claim the Additional Child Tax Credit at all. This includes people who received only unemployment benefits, Social Security, or investment income. The credit is designed to benefit working families, so earned income is a requirement.

The credit also does not carry over to future years. If you cannot use it in the year your child qualifies, you lose it. This is different from some other credits, such as the Earned Income Tax Credit, which can be carried back or forward under certain conditions.

Frequently Asked Questions

Can I claim the Additional Child Tax Credit if I did not work during the year?

No. You must have earned income (wages, self-employment income, or similar) to claim the Additional Child Tax Credit. If your only income was unemployment, Social Security, or investment returns, you do not meet the requirement. The credit is limited to 15% of earned income above $2,500.

What happens if my child turns 17 during the tax year?

The child must be under age 17 at the end of the tax year to count. If your child turns 17 on December 31, they do not may have access to for that year. If they turn 17 on January 1 or any date before December 31, they do not may have access to. The age is measured on December 31 of the tax year.

Do I lose the Additional Child Tax Credit if my income is too high?

The credit does not disappear, but it shrinks. Once your modified adjusted gross income exceeds $400,000 (married filing jointly) or $200,000 (single or head of household), the credit reduces by $50 for every $1,000 over the limit. At very high incomes, the credit may reduce to zero.

Can I claim the Additional Child Tax Credit if I am not a U.S. citizen?

You can claim it if you are a resident alien with a valid Individual Taxpayer Identification Number (ITIN) and meet all other requirements. The child must be a U.S. citizen, national, or resident alien. Nonresident aliens cannot claim the credit.

What if I claimed my child as a dependent but my ex-spouse also claimed them?

Only one person can claim a child as a dependent in a given year. If both of you file claiming the same child, the IRS will disallow one claim. Generally, the person who had the child live with them for the longest time in the year has the right to claim the child and the credit. You may need to amend your return if you filed incorrectly.