The Child Tax Credit can be refundable or nonrefundable, depending on which version you claim and how much tax you owe

The Child Tax Credit comes in two forms: the regular credit (up to $2,000 per child under 17) and the Additional Child Tax Credit, which is refundable. Whether you get money back depends on which one you claim and whether your tax bill is large enough to use the full credit.

If the regular credit is larger than the tax you owe, you lose the excess — that part is nonrefundable. But the Additional Child Tax Credit (also called the refundable portion) can send you money even if you owe no tax at all. The IRS limits the refundable amount to 15 percent of your earned income above $2,500, or a flat amount set each year (currently up to $1,700 per child for the 2023 tax year, though this changes annually).

The key difference: a nonrefundable credit can only reduce your tax bill to zero. A refundable credit can reduce it below zero and result in a refund check.

Key Takeaways

  • The regular Child Tax Credit (up to $2,000 per child) is nonrefundable, meaning it cannot give you money back if it exceeds what you owe in taxes.
  • The Additional Child Tax Credit is the refundable portion, capped at 15 percent of earned income over $2,500 or a yearly maximum (currently $1,700 per child for 2023).
  • You must have earned income to claim the refundable portion — investment income, unemployment, or child support do not count.
  • The IRS calculates both automatically when you file; you do not need to choose between them or take separate steps.

How the nonrefundable and refundable portions work together

When you file your tax return, the IRS first applies the regular Child Tax Credit to reduce your tax bill. If you owe $1,200 in tax and claim $2,000 in credit, your bill drops to zero and the remaining $800 disappears — you do not get it back.

Then the IRS checks whether you may have access to for the Additional Child Tax Credit. This refundable portion is calculated separately: it is 15 percent of your earned income (wages, self-employment income) that exceeds $2,500, up to the yearly cap. For 2023, that cap is $1,700 per child. If you earned $35,000 and have one child, your refundable credit would be 15 percent of $32,500 ($35,000 minus $2,500), which equals $4,875 — but it is capped at $1,700, so you get $1,700 back.

You do not choose between the two or file separate forms. The IRS calculates both when you file your return and pays whichever amount you are owed.

Who can claim the refundable portion

To receive money back through the Additional Child Tax Credit, you must have earned income. This means wages from a job, net self-employment income, or taxable military housing allowance. It does not include Social Security, unemployment benefits, child support, investment income, or rental income.

You must also meet the basic Child Tax Credit rules: the child must be under 17 at the end of the tax year, claimed as your dependent, a U.S. citizen or resident alien, and have a valid Social Security number. The child must live with you for more than half the year.

If you have no earned income, you cannot claim the refundable portion, even if you have children and would otherwise may have access to for the regular credit.

Income limits and phase-out rules

The regular Child Tax Credit begins to reduce at higher incomes: $400,000 for married couples filing jointly, $200,000 for single filers. For every $1,000 (or fraction thereof) over the limit, the credit drops by $50.

The refundable portion (Additional Child Tax Credit) has no income limit — it is available to anyone with earned income, regardless of how much they earn. This is one reason lower-income families often receive refunds through this credit even when they owe little or no tax.

The yearly cap on the refundable amount changes annually. Check the IRS website or your tax software for the current year's limit before you file.

What documents you need to claim the credit

To claim either version of the Child Tax Credit, you need the child's full name, date of birth, and valid Social Security number on your return. The IRS matches this information to verify the child exists and is not claimed by another taxpayer.

You do not need to submit birth certificates, custody papers, or proof of residency with your return — but keep them on file in case the IRS requests verification. If you claim a child and another person (such as an ex-spouse) also claims the same child, the IRS will reject one of the claims and may delay both refunds while they investigate.

If you are filing electronically, your tax software will prompt you to enter the child's information and calculate the credit automatically.

Advance payments and reconciliation

In some years, the IRS has sent advance Child Tax Credit payments to families before they file their return. When this happens, you receive part of the credit as monthly payments and claim the remainder when you file.

On your return, you must report how much you received in advance. The IRS then calculates what you are owed for the full year and adjusts your refund or bill accordingly. If you received more in advance than you were may have access to to, you may owe some back — though the IRS has sometimes limited this clawback for lower-income filers.

Check your IRS records or the letter you received to confirm the advance amount before you file.

Frequently Asked Questions

Can I get the refundable portion if I do not owe any tax?

Yes, if you have earned income. The Additional Child Tax Credit is refundable, meaning it can result in a refund even if your tax bill is zero. The amount is limited to 15 percent of earned income over $2,500 or the yearly cap, whichever is smaller.

What happens if I claim a child and someone else claims the same child?

The IRS will reject one claim and may delay both refunds while they investigate. Only one person can claim a child per tax year. If you and another parent share custody, the parent who has the child for the longer part of the year typically claims the credit, unless you have a written agreement saying otherwise.

Does self-employment income count toward the refundable portion?

Yes. Self-employment income (after deducting half of self-employment tax) counts as earned income for the Additional Child Tax Credit. You must have net profit from your business to may have access to.

Will I owe back the advance payments if my income changes?

Possibly. If you received advance payments and your income ended up lower than expected, you may owe some back when you file — though the IRS has sometimes waived or limited this for lower-income households. File your return to see the exact amount owed or owed to you.

What is the difference between the Child Tax Credit and the Earned Income Tax Credit?

The Child Tax Credit is based on the number of children you claim. The Earned Income Tax Credit is based on your earned income and family size. You can claim both in the same year if you meet the rules for each. They are separate credits with different income limits and calculations.