The Child Tax Credit is partly refundable, but not all of it

The Child Tax Credit is worth up to $2,000 per child under 17, but only a portion of it comes back to you as a refund if you owe no taxes. The refundable part is called the Additional Child Tax Credit, and it can return up to $1,700 per child for the 2023 tax year (the amount changes yearly). The remaining $300 per child is non-refundable, meaning you only benefit from it if you owe federal income tax.

Whether you receive a refund depends on your income and how many children you claim. If your income is below a certain threshold, you may not receive the full refundable amount. The IRS calculates this based on your earned income — wages, self-employment income, and similar sources — not investment income or benefits.

Key Takeaways

  • Up to $1,700 per child can come back to you as a refund even if you owe no taxes, but this is only the refundable portion of the $2,000 credit.
  • The refundable amount phases in based on your earned income, so lower-income families may receive less than the full $1,700.
  • You must file a tax return to receive the refundable credit, even if your income is too low to normally require filing.
  • The refundable amount changes each tax year, so the $1,700 figure applies to 2023 but may differ for other years.

How the refundable portion works

The refundable part of the Child Tax Credit is calculated using a formula based on your earned income. For 2023, if your earned income exceeds $2,500, the IRS allows you to claim 15 percent of the amount above $2,500, up to the maximum of $1,700 per child. This means families with very low earned income may receive a smaller refund than those with higher earned income.

Example: If you earned $10,000 in 2023 and have one child, your refundable credit would be 15 percent of ($10,000 − $2,500) = 15 percent of $7,500 = $1,125. You would receive $1,125 back as a refund, not the full $1,700.

If your earned income is $2,500 or less, you receive no refundable credit. However, you may still benefit from the non-refundable portion if you owe taxes.

Non-refundable versus refundable: what the difference means

A non-refundable credit reduces the amount of tax you owe, but it cannot push your refund below zero. A refundable credit can do both: it reduces your tax bill and, if the credit is larger than what you owe, the IRS sends you the difference.

With the Child Tax Credit, $1,300 of the $2,000 is non-refundable. This means if you owe $500 in taxes and claim one child, the non-refundable portion wipes out your $500 bill, but you do not receive the remaining $800 of that portion. The refundable portion ($1,700 maximum) works differently: if you owe nothing, the refundable part can still send money to you.

This structure means families who owe little or no tax benefit most from the refundable portion, while families with higher tax bills benefit from both portions.

Who receives the full refundable amount

To receive the maximum $1,700 refundable credit per child (for 2023), your earned income must be high enough that 15 percent of the amount above $2,500 reaches $1,700. This happens when your earned income is approximately $13,833 or higher. Families earning less than this threshold receive a smaller refundable amount.

The refundable credit is available to families at all income levels, including those who earn too little to owe federal income tax. However, you must file a tax return to claim it, even if you are not required to file based on your income alone.

Families with multiple children can claim the refundable credit for each child, so a family with three children could receive up to $5,100 in refundable credits (3 × $1,700) if their income is high enough.

You must file a return to receive the refund

The IRS does not automatically send you the refundable Child Tax Credit. You must file a federal income tax return, even if your income is below the filing requirement. This is one of the few situations where filing is worth doing even though you owe no taxes.

You can file using Form 1040 and Schedule 8812 (Additional Child Tax Credit). If you use tax software or work with a tax preparer, they will calculate the refundable amount for you. Filing by the deadline (usually April 15) ensures you receive your refund in the normal timeframe, though you can file late and still claim the credit.

Income limits and phase-out rules

The Child Tax Credit begins to phase out at higher income levels. For 2023, the credit starts to reduce if your modified adjusted gross income (MAGI) exceeds $400,000 for married couples filing jointly or $200,000 for single filers. The credit decreases by $50 for each $1,000 (or fraction thereof) above these thresholds.

This phase-out applies to both the refundable and non-refundable portions. If your income is high enough that the credit phases out completely, you receive neither the refundable nor the non-refundable amount. However, most families do not reach these income levels.

The income thresholds and refundable amounts change each tax year. Check the IRS website or your tax software for the current year's figures before filing.

What documents you need to claim the credit

To claim the Child Tax Credit, you need the Social Security number for each child you are claiming. The child must be a U.S. citizen, national, or resident alien, and you must have provided more than half their financial support during the year. You also need proof of your relationship to the child (birth certificate, adoption papers, or court order) if the IRS requests it, though you do not submit this with your return.

Keep records of your earned income for the year, such as W-2 forms from employers or Schedule C (self-employment income) if you are self-employed. If you received any other tax credits or deductions, gather those documents as well. The IRS may ask for documentation later if they review your return.

Frequently Asked Questions

Can I get the refundable credit if I did not work?

No. The refundable credit is based on earned income, which includes wages and self-employment income but not unemployment benefits, Social Security, or other assistance. If you have no earned income, you cannot claim the refundable portion, though you may still benefit from the non-refundable portion if you owe taxes.

What if my child was born late in the year?

Your child must be under 17 at the end of the tax year to count for the credit. If your child was born on December 31, they count for that year. If born on January 1 of the following year, they do not count until the next tax year. You claim the credit for the year in which they were born if they meet the age requirement on December 31 of that year.

Do I lose the refundable credit if I claim the non-refundable portion?

No. The IRS applies both portions together. The non-refundable portion reduces your tax bill first, and then the refundable portion is calculated separately. You do not have to choose between them; you receive both if you are may have access to to both.

What happens if I claimed the credit in advance through the monthly payments?

From 2021 to 2022, the IRS sent advance Child Tax Credit payments to many families. If you received these payments, you must report the amount on your tax return. The IRS will reconcile what you received against what you are may have access to to claim, and you may owe money back or receive an additional refund depending on your final income and circumstances.

Can I claim the credit for a stepchild or grandchild?

Yes, if you provided more than half their financial support during the year and they lived with you for more than half the year. They must also have a valid Social Security number and be a U.S. citizen, national, or resident alien. The relationship requirement is flexible — the IRS looks at who actually supported the child, not just legal adoption or marriage.