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

The Additional Child Tax Credit (also 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. Most tax credits only reduce what you owe — they cannot give you money back. This one can.

Here is the difference: if you owe $800 in federal income tax and you have a $1,200 Child Tax Credit, a regular credit would wipe out your $800 debt and leave you with a $400 credit you cannot use. The Additional Child Tax Credit converts part of that unused $400 into a refund the IRS sends to you. You claim it on Form 1040 (your main tax return) using Schedule 8812.

The amount you can get back is limited. For the 2023 tax year, the maximum refund through the Additional Child Tax Credit is $1,700 per child under age 17. This limit changes each year with inflation. The IRS website publishes the current year's limit on their Form 1040 instructions.

Key Takeaways

  • The Additional Child Tax Credit sends you money if your Child Tax Credit is bigger than your tax bill, rather than letting the extra credit disappear.
  • You must have earned income (wages, self-employment income, or certain other sources) to claim this credit — it is not available to people with no earned income.
  • You claim the Additional Child Tax Credit on Schedule 8812, which attaches to your Form 1040.
  • The maximum refund per child changes yearly and is published in the Form 1040 instructions each tax season.
  • This credit is separate from the regular Child Tax Credit and only applies to the portion of your credit that exceeds your tax liability.

How the Additional Child Tax Credit calculates your refund

The IRS uses a formula to determine how much of your unused Child Tax Credit becomes a refund. The formula is based on your earned income and the number of may have access to children.

For most filers, the calculation works like this: take 15 percent of your earned income that exceeds $2,500, then compare it to your unused Child Tax Credit. Whichever is smaller is what you can claim as the Additional Child Tax Credit. If your earned income is $2,500 or less, you cannot claim this credit.

Example: You have one child and a $2,000 Child Tax Credit. Your federal income tax for the year is $300. Your unused credit is $1,700 ($2,000 minus $300). Your earned income is $28,000. Fifteen percent of ($28,000 minus $2,500) equals $3,825. Since your unused credit ($1,700) is smaller than $3,825, you can claim $1,700 as the Additional Child Tax Credit — but only up to the annual per-child limit, which for 2023 was $1,700.

Who can claim the Additional Child Tax Credit

You must meet three conditions. First, you must have at least one may have access to child — generally a child under age 17 at the end of the tax year who is your son, daughter, stepchild, foster child, sibling, or descendant of any of these, and whom you claim as a dependent on your return.

Second, you must have earned income during the year. Earned income includes wages from a job, net self-employment income, and certain other sources like taxable scholarship or fellowship grants. It does not include investment income, Social Security, unemployment benefits, or child support.

Third, you must have a valid Social Security Number or Individual Taxpayer Identification Number (ITIN) for yourself and each may have access to child. The IRS will not process your return without these numbers.

You do not need to owe federal income tax to claim this credit. In fact, many people who claim the Additional Child Tax Credit owe zero tax — the credit is what creates their refund.

How to claim the Additional Child Tax Credit on your tax return

You claim the Additional Child Tax Credit using Schedule 8812, which is a worksheet that attaches to your Form 1040. You fill in your earned income, the number of may have access to children, and follow the formula to calculate the amount you can claim.

If you use tax software, the program usually walks you through the questions and calculates Schedule 8812 for you. If you file by hand, you can read Schedule 8812 from the IRS website (irs.gov) or request it by phone at 1-800-829-3676.

The Schedule 8812 amount goes on line 28 of your Form 1040 (the line for refundable credits). When you file, the IRS processes this amount as part of your refund calculation.

The difference between the Child Tax Credit and the Additional Child Tax Credit

The Child Tax Credit is $2,000 per may have access to child (as of 2023; this amount can change). You claim it on Form 1040 directly, and it reduces your federal income tax dollar-for-dollar.

The Additional Child Tax Credit is the refundable part of that same $2,000 credit. If you have more credit than tax owed, the Additional Child Tax Credit lets you convert the excess into a refund, up to the annual limit per child.

Think of it this way: the Child Tax Credit is the full benefit. The Additional Child Tax Credit is the portion of that benefit that the IRS will send back to you as a refund rather than just erasing your tax bill.

Income limits and phase-out rules

The Child Tax Credit itself begins to phase out (shrink) if your modified adjusted gross income (MAGI) exceeds certain thresholds. For 2023, the phase-out begins at $400,000 for married couples filing jointly and $200,000 for single filers. The credit reduces by $50 for each $1,000 (or fraction thereof) over the threshold.

The Additional Child Tax Credit is not subject to a separate income limit. However, because it is calculated based on your unused Child Tax Credit, a phase-out of the main credit will reduce the amount available to refund. If your income is very high and your Child Tax Credit phases out completely, you will have no Additional Child Tax Credit to claim.

What happens if you claim the Additional Child Tax Credit incorrectly

If you claim more than you are may have access to to, the IRS will correct your return during processing. You will receive a notice explaining the adjustment, and your refund will be reduced by the amount of the overstatement. You will not face a penalty for an honest mistake, but you may owe interest if the error results in a significant underpayment.

If the IRS suspects fraud — for example, if you claim children who are not yours or do not have valid Social Security Numbers — the agency can delay your refund for months while it investigates. Providing false information on your tax return is a federal crime.

The safest approach is to use tax software or work with a tax professional if you are unsure whether you may have access to or how much to claim.

Frequently Asked Questions

Can I claim the Additional Child Tax Credit if I do not owe any federal income tax?

Yes. The Additional Child Tax Credit is refundable, meaning the IRS can send you money even if you owe zero tax. Many people with low to moderate income claim this credit and receive a refund as a result.

What if my child does not have a Social Security Number yet?

You cannot claim the Additional Child Tax Credit (or the regular Child Tax Credit) for a child without a valid Social Security Number or ITIN. If your child was born late in the year and does not have a number yet, you can file an amended return the following year once the number is issued.

Does the Additional Child Tax Credit count as income for other programs?

No. The Additional Child Tax Credit is a tax refund, not income. It does not count toward the income limits for programs like Medicaid, SNAP, or housing information. However, you should report it to any program that asks about your total household income for the year, since it affects your tax liability.

Can I claim the Additional Child Tax Credit for a foster child or grandchild?

Yes, if the child meets the definition of a may have access to child. The child must live with you for more than half the year, be under age 17 at the end of the tax year, and you must claim them as a dependent. A foster child placed with you by an authorized agency qualifies. A grandchild qualifies if you provide more than half their financial support.

What if my income is very low or I have no earned income?

If your earned income is $2,500 or less, you cannot claim the Additional Child Tax Credit because the formula produces zero. If you have no earned income at all, you are not may be able to access. However, you may still claim the regular Child Tax Credit if you meet the other requirements.