The Additional Child Tax Credit is a refund, not just a tax break

The Additional Child Tax Credit (ACTC) is a refund you can receive from the IRS if you have dependent children and your income is below certain thresholds. Unlike the regular Child Tax Credit, which reduces the taxes you owe, the ACTC can put money back in your pocket even if you owe no federal income tax at all. This happens because the ACTC is refundable — meaning the IRS can send you cash rather than just erasing a tax bill.

The regular Child Tax Credit gives you up to $2,000 per child under age 17. If that credit is larger than the taxes you actually owe, the ACTC lets you claim the leftover amount as a refund. The maximum ACTC is $1,700 per child, though the exact amount depends on your earned income for the year.

Key Takeaways

  • The ACTC is a refund you receive from the IRS if you have dependent children and your earned income is below the income limit for your filing status.
  • You must have earned income (wages, self-employment income, or certain other sources) to claim the ACTC — investment income or benefits do not count.
  • The ACTC is claimed on your federal tax return using Form 1040 and Schedule 8812, which you file with the IRS each year.
  • The maximum ACTC is $1,700 per child, but the amount you receive depends on how much earned income you had during the year.
  • You do not need to owe taxes to receive the ACTC, and you do not need to have paid taxes during the year.

Income limits and how much you can receive

To claim the ACTC, your earned income must be at least $2,500 for the tax year. If your earned income is below $2,500, you cannot claim the credit. There is no upper income limit written into the ACTC rules themselves, but the amount of the credit phases out as your income rises above $400,000 (for married couples filing jointly) or $200,000 (for single filers and heads of household).

The amount of ACTC you receive is based on 15 percent of your earned income above $2,500, up to the maximum of $1,700 per child. For example, if you have one child and earned $10,000 during the year, your ACTC would be 15 percent of $7,500 ($10,000 minus $2,500), which equals $1,125. If you have three children and earned $15,000, your ACTC would be 15 percent of $12,500, which equals $1,875 — but capped at $1,700 per child, so your total would be $5,100.

What counts as earned income for the ACTC

Earned income means money you received from working. This includes wages from a job, net self-employment income if you run a business, and certain other sources like taxable combat pay if you are military. It does not include Social Security benefits, Supplemental Security Income (SSI), unemployment benefits, child support, or investment income like interest or dividends.

If you are self-employed, your earned income is your net profit after business expenses. If you had a loss in your business, that does not count as earned income for ACTC purposes. You report your self-employment income on Schedule C (Form 1040) and then use that figure to calculate the ACTC on Schedule 8812.

How to claim the ACTC on your tax return

You claim the ACTC by filing a federal tax return, even if you normally would not have to file. You use Form 1040 (the main individual income tax form) and attach Schedule 8812, which is the worksheet for calculating child and dependent credits. You list each dependent child's name, date of birth, and Social Security number on your return.

If you use tax preparation software or work with a tax preparer, they will ask you about your dependent children and earned income, and the software or preparer will calculate the ACTC for you. You must file your return with the IRS to receive the refund. The IRS processes returns and sends refunds by mail or direct deposit, usually within 21 days of accepting your return if you file electronically.

Dependent children and Social Security numbers

Each child you claim must be your dependent for tax purposes. This means the child must be under age 17 at the end of the tax year, live with you for more than half the year, be a U.S. citizen, national, or resident alien, and you must provide more than half their financial support. You also need each child's valid Social Security number to claim them on your return.

If a child does not have a Social Security number, you cannot claim the ACTC for that child. You can apply for a Social Security number through the Social Security Administration if your child does not have one yet. The application process takes several weeks, so plan ahead if you are expecting to file your tax return soon.

When the ACTC is paid and how to receive it

If you file your tax return and the IRS approves your ACTC, the refund is sent to you by mail or direct deposit, depending on how you filed. If you provided a bank account number on your return, the IRS will deposit the refund directly into that account. Direct deposit is faster — usually within 21 days of the IRS accepting your return. If you did not provide a bank account, the IRS mails a check, which can take several weeks longer.

You can track your refund using the IRS "Where's My Refund?" tool on the IRS website. You will need your Social Security number, filing status, and the exact refund amount to use this tool. The tool updates once per day, usually overnight.

The ACTC and other tax credits or benefits

The ACTC works alongside the regular Child Tax Credit. If you claim the regular Child Tax Credit and it is larger than your tax bill, the ACTC lets you claim the excess as a refund. You cannot claim both credits for the same child in the same year — you claim one combined credit that includes both the regular and additional portions.

Receiving the ACTC does not affect your may be able to access for other programs like SNAP (food assistance), Medicaid, or housing assistance. The IRS does not report ACTC refunds to other government agencies, and the refund is not counted as income for purposes of those programs in most cases. However, if you receive Supplemental Security Income (SSI), a refund may affect your SSI benefits, so check with the Social Security Administration if you receive SSI.

Frequently Asked Questions

Do I have to file a tax return to get the ACTC if I do not owe taxes?

Yes. You must file a federal tax return with the IRS to claim the ACTC, even if you owe no federal income tax and no one requires you to file. Filing is how you tell the IRS about your dependent children and earned income so they can calculate and send you the refund.

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

You cannot claim the ACTC for a child without a valid Social Security number. You can apply for one through the Social Security Administration, but the process takes several weeks. If you file your return before the number arrives, you can file an amended return (Form 1040-X) once you have the number.

Can I get the ACTC if I am not a U.S. citizen?

You must have a valid Social Security number to claim the ACTC. If you are not a U.S. citizen but have a work visa and a Social Security number, you may be able to claim it. If you have an Individual Taxpayer Identification Number (ITIN) instead, you cannot claim the ACTC. Consult a tax preparer about your specific situation.

What happens if I made a mistake on my ACTC claim?

If the IRS finds an error, they will send you a notice explaining the problem and how much you owe back or will receive as an additional refund. You can also file an amended return (Form 1040-X) if you discover the error yourself. Mail the amended return to the IRS address shown in the instructions.

Does the ACTC refund count as income for other benefits?

The ACTC refund is generally not counted as income for SNAP, Medicaid, or housing assistance. However, if you receive Supplemental Security Income (SSI), the refund may reduce your SSI payment. Contact the Social Security Administration before filing if you receive SSI.