The Child Tax Credit is partially refundable, meaning you can receive money back even if you owe no taxes

The Child Tax Credit works in two parts. The first part — up to $2,000 per child — reduces the taxes you owe. If that credit is larger than your tax bill, you do not get the extra money; it simply disappears. But the second part, called the Additional Child Tax Credit or refundable portion, can send you a check. This refundable piece is worth up to $1,700 per child (the exact amount changes year to year based on inflation). You receive it only if you have earned income — wages, self-employment income, or similar — and only if the refundable portion is larger than the taxes you owe.

Whether you actually receive a refund depends on your total tax situation. If your non-refundable credit ($2,000 per child) already wipes out all your taxes, you will not see the refundable portion. But if you have little or no tax liability to begin with — because your income is low or you have other credits — the refundable portion can result in a payment to you from the IRS.

Key Takeaways

  • The Child Tax Credit has a non-refundable part (up to $2,000 per child) that only reduces taxes owed, and a refundable part (up to $1,700 per child) that can result in a payment to you.
  • You must have earned income to receive the refundable portion; investment income or benefits alone do not count.
  • The refundable amount changes each year based on inflation, so the exact dollar figure varies.
  • If your tax bill is zero or very small, the refundable portion is what determines whether you receive money back.

How the non-refundable and refundable portions work together

When you file your tax return, the IRS first applies the non-refundable credit against your tax liability. This is the main $2,000-per-child amount. If you owe $1,500 in taxes and claim one child, that $2,000 credit eliminates your tax bill and leaves $500 unused. That $500 does not roll over to the refundable portion — it is simply lost.

The refundable portion is calculated separately. It is based on your earned income and is limited to a percentage of that income (15 percent in most years). The IRS compares this refundable amount to any taxes still owed after the non-refundable credit is applied. If the refundable amount is larger, you receive the difference as a refund. If you owe no taxes at all, the full refundable amount (up to the per-child limit) can be paid to you.

This structure means a family with very low income — say, $15,000 in earned income from part-time work — might owe no federal income tax but still receive a refund because of the refundable portion of the credit.

Income requirements and earned income rules

To receive any refundable portion of the Child Tax Credit, you must have earned income. This includes wages from an employer, net self-employment income, or taxable combat pay if you are military. It does not include Social Security, Supplemental Security Income (SSI), unemployment benefits, child support, or investment income.

The refundable amount is calculated as 15 percent of your earned income above $2,500 (in 2023; this threshold adjusts annually). So if you earned $10,000, the calculation would be 15 percent of $7,500, which equals $1,125. This $1,125 is then compared to your tax liability. If you owe $500, you would receive a $625 refund. If you owe nothing, you would receive the full $1,125 (or the per-child limit, whichever is smaller).

There is no upper income limit to claim the Child Tax Credit, but the credit begins to phase out at higher incomes. The phase-out does not affect whether the refundable portion is available — only the total amount you can claim.

What counts as a may have access to child

The child must be your dependent, under age 17 at the end of the tax year, and a U.S. citizen, national, or resident alien. You must provide their Social Security number on your return. The child can be your biological child, stepchild, adopted child, or a relative you care for (such as a grandchild or niece) if they live with you for the entire year and you provide more than half their financial support.

Only one person can claim each child. If two parents are divorced or separated, the parent with custody typically claims the child, though the parents can agree otherwise. If you claim a child who is also claimed by someone else, the IRS will disallow one of the claims and may assess penalties.

How to report the refundable credit on your tax return

You report the Child Tax Credit on Form 1040 (the main individual income tax return) and Schedule 8812 (if you are claiming the refundable portion). Most tax software will calculate both portions automatically if you enter your children's information and your income.

If you use a paper return, you will list each may have access to child's name and Social Security number on Form 1040, then calculate the credit amount. Schedule 8812 is used to determine how much of the credit is refundable based on your earned income. If you file electronically or use tax software, these calculations are usually done for you.

You do not need to do anything special to claim the refundable portion — it is calculated as part of the standard credit process. However, you must have earned income and file a return to receive it. If you have no tax filing requirement (because your income is below the threshold), you can still file a return to claim the refundable credit.

Advance payments and monthly distributions

In some years, the IRS has issued advance payments of the Child Tax Credit directly to families throughout the year, rather than waiting until tax time. These advance payments were sent monthly to families who met income requirements. The advance amount was subtracted from the total credit you could claim when you filed your return.

If you received advance payments, you will report them on your return using Form 6419. The IRS will compare the advance amount to your actual credit and either send you the difference or ask you to repay the overage. This reconciliation happens automatically when you file.

Whether advance payments are available in a given year depends on Congress and the IRS. Check the IRS website or your tax software for current-year information about advance distributions.

Frequently Asked Questions

Can I get the refundable portion if I have no income?

No. You must have earned income to receive the refundable portion of the Child Tax Credit. If your only income is from benefits, investments, or other non-earned sources, you cannot claim the refundable credit. You may still claim the non-refundable portion if you owe taxes.

What if I earned $5,000 but owe no taxes — how much refund do I get?

The refundable amount is 15 percent of earned income above $2,500. With $5,000 earned, that is 15 percent of $2,500, or $375 per child. If you owe no taxes, you would receive up to $375 per child (the actual limit is higher but varies by year). If you have two children, you could receive up to $750.

If I claim two children, is the refundable limit doubled?

Yes. The refundable portion is calculated per child, up to the annual limit per child (currently $1,700). With two children, the maximum refundable amount is roughly double, though the exact total depends on your earned income and the year's inflation adjustment.

Do I lose the refundable credit if my income is too high?

The refundable portion does not have an income phase-out. However, the total credit (refundable and non-refundable combined) begins to phase out at higher incomes. At very high incomes, you may receive no credit at all. Check the IRS website for current income thresholds.

What happens if I received an advance payment but my income changed?

If you received monthly advance payments but your income was lower than expected, you may have received more than you were may have access to to. When you file your return, the IRS will calculate the correct amount and ask you to repay the overage. You can claim this repayment as a deduction or offset it against other refunds owed to you.