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, the second part kicks in: the Additional Child Tax Credit, which can refund the overage directly to you. This refundable portion is capped at $1,700 per child for the 2023 tax year, though this amount changes yearly based on inflation.

Whether you actually receive a refund depends on your income and how many children you claim. A family earning $20,000 with two children might get a refund of $1,400 or more. A family earning $150,000 with the same two children might get no refund at all, because their tax bill is large enough to absorb the full credit. The IRS does not send you money unless the refundable portion exceeds what you owe.

Key Takeaways

  • The Child Tax Credit reduces your tax bill by up to $2,000 per child, and any amount over what you owe can be refunded to you as the Additional Child Tax Credit.
  • The refundable portion is capped at $1,700 per child for 2023, meaning you cannot receive more than that amount back per child even if the full credit is larger.
  • You must have earned income to receive the refundable portion — if you had no income or only unearned income like Social Security, you cannot get the refund.
  • The credit phases out at higher incomes, so families earning over $400,000 (married filing jointly) receive a reduced or zero credit.

How the refundable and non-refundable portions work together

Think of the Child Tax Credit as two separate tools working in order. First, the IRS applies up to $2,000 per child against your total tax bill. If you owe $1,200 in taxes and claim one child, the $2,000 credit wipes out your $1,200 bill and leaves $800 unused.

That $800 unused credit then becomes the Additional Child Tax Credit, which is refundable. The IRS sends it to you as a refund check or direct deposit. However, there is a ceiling: you cannot receive more than $1,700 per child this way, no matter how large the unused portion is. If your unused credit is $2,500 per child, you still only receive $1,700 back.

If you owe $3,000 in taxes and claim one child, the $2,000 credit reduces your bill to $1,000. You owe the remaining $1,000 — there is no refund because the credit did not exceed your tax bill.

Income requirements for the refundable portion

You must have earned income to receive any refund through the Additional Child Tax Credit. Earned income means wages, salary, self-employment income, or farm income — money you received for work. It does not include Social Security, unemployment benefits, investment income, or pension payments.

The amount of refund you can receive is also limited by your earned income. If you earned $1,200 and your unused Child Tax Credit is $3,400, you can only receive $1,200 back, because the refund cannot exceed your earned income for the year. This rule prevents people with very low or zero earned income from receiving large refunds.

There is one exception: if you have three or more children, a different calculation applies. The IRS compares your refund under the standard rule to 15 percent of your earned income above $2,500. Whichever amount is larger is what you receive. This rule can result in a larger refund for families with multiple children and modest income.

Income phase-out and reduced credits

The Child Tax Credit begins to shrink once your income reaches a certain threshold. For 2023, the phase-out starts at $400,000 for married couples filing jointly and $200,000 for single filers. For every $1,000 of income above that threshold, the credit reduces by $50.

If you are married filing jointly and earn $410,000, your credit reduces by $500 (for the $10,000 over the threshold). With two children, your credit drops from $4,000 to $3,500. The refundable portion also shrinks proportionally, so a family that would have received $1,700 back might instead receive $1,437.

Once your income reaches high enough levels, the credit disappears entirely. At $440,000 for married filers, the credit for two children is completely phased out. Single filers hit zero at $220,000.

What documents you need to claim the credit

To claim the Child Tax Credit on your tax return, you need the Social Security number for each child you are claiming. The IRS matches these numbers against Social Security Administration records, so the number must be correct and the child must be a U.S. citizen, national, or resident alien.

You also need proof of your relationship to the child and proof that the child lived with you for more than half the year. A birth certificate, adoption papers, or court order establishes relationship. For residency, keep records of where the child lived — school enrollment, medical records, or a lease with the child's name all work.

If you are filing taxes yourself, you enter the child's information directly on Form 1040 and Schedule 8812 (if you are claiming the Additional Child Tax Credit). If you use a tax preparer or software, they will ask for the child's name, date of birth, and Social Security number during the interview process.

Situations where you receive no refund

You will not receive a refund if your tax bill is large enough to absorb the entire $2,000 credit. A family earning $120,000 with one child and a tax bill of $2,500 owes $500 after the credit — no refund.

You also receive no refund if you have no earned income. A parent who stayed home with children and had no wages, self-employment income, or other earned income cannot claim the refundable portion, even if they have children. They can still reduce their tax bill by the non-refundable portion if someone else in the household had income and they file jointly.

If your income is above the phase-out threshold, your credit shrinks and the refundable portion shrinks with it. At very high incomes, the credit may be reduced to zero, meaning no refund and no tax reduction.

How to report the credit on your return

On Form 1040, you list each child's name, date of birth, and Social Security number in the "Dependents" section. The form automatically calculates your Child Tax Credit based on the number of children and your income.

If you expect a refund from the Additional Child Tax Credit, you do not need to do anything extra — the IRS calculates it automatically. However, if you want to claim the credit and you have three or more children, you may need to file Schedule 8812 to use the alternative calculation that could give you a larger refund.

If you use tax software, the program walks you through questions about your children and calculates the credit for you. If you use a tax preparer, they handle the calculation. The key is providing accurate information: correct names, correct Social Security numbers, and accurate income figures.

Frequently Asked Questions

Can I get a refund if I did not work during the year?

No. The refundable portion of the Child Tax Credit requires earned income. If you had no wages or self-employment income, you cannot receive a refund, even if you have children. You may still reduce your tax bill by the non-refundable portion if you file jointly with someone who had income.

What if my child was born in December — do I get the full credit?

Yes. The IRS counts any child born during the tax year as a dependent for the full year. A child born on December 31 qualifies for the full $2,000 credit (or the refundable portion if you are due a refund). You need the child's Social Security number to claim the credit.

Does the refundable credit change year to year?

Yes. The refundable portion is adjusted annually for inflation. For 2023 it is $1,700 per child; for 2024 it is $1,800. The IRS announces the new amount each January. The non-refundable portion ($2,000 per child) has remained the same since 2017.

If I owe back taxes or student loans, will the IRS keep my refund?

Possibly. The IRS can offset a refund to pay back taxes you owe to the federal government. State tax agencies can also offset refunds for state taxes owed. The Department of Education can offset refunds for defaulted federal student loans. The IRS notifies you before offsetting, and you have a right to request a hearing.

Can I claim the credit if my child does not have a Social Security number?

No. The IRS requires a valid Social Security number for each child you claim. If your child is a resident alien without a Social Security number, you cannot claim the credit. If your child is a U.S. citizen but does not yet have a number, you can apply for one through the Social Security Administration before filing your return.