What the Additional Child Tax Credit is and who can claim it

The Additional Child Tax Credit (ACTC) is a refundable tax credit that can put money in your pocket even if you owe no federal income tax. The regular Child Tax Credit reduces the tax you owe; the Additional Child Tax Credit can refund you the difference if that credit is larger than your tax bill. You claim it on your tax return using Form 1040 and Schedule 8812.

You can claim the ACTC if you have a may have access to child under age 17, you earned income during the year, and your income falls below the phase-out threshold (which varies by filing status and changes yearly). The credit is not a separate payment — it appears on your tax return when you file, and you receive it as part of your refund.

The maximum ACTC per child is $1,700 for the 2023 tax year, though the amount you can claim depends on your earned income. If you earned less than $2,500, you cannot claim the ACTC, even if you have may have access to children. The IRS publishes updated income limits and maximum amounts each January.

Key Takeaways

  • The Additional Child Tax Credit can refund you money even if you owe no tax, but only if you have earned income and a may have access to child under 17.
  • You must earn at least $2,500 in the tax year to claim any ACTC, and the maximum credit per child changes yearly.
  • You claim the ACTC on Form 1040 and Schedule 8812 when you file your tax return; you do not request it separately.
  • The credit phases out at higher income levels, so your income determines how much of the maximum credit you can actually claim.
  • If you received an advance payment of the Child Tax Credit in prior years, that affects how much ACTC you can claim now.

How earned income affects your ACTC amount

The ACTC is calculated as 15 percent of your earned income above $2,500, up to the maximum credit per child. This means the more you earned, the larger your credit — but only up to the yearly maximum. For example, if you earned $10,000 and have one may have access to child, your ACTC would be 15 percent of $7,500 ($10,000 minus $2,500), which equals $1,125.

Earned income includes wages from a job, self-employment income, and taxable scholarship or fellowship grants. It does not include investment income, unemployment benefits, Social Security, or child support. If you are self-employed, you calculate earned income after the self-employment tax deduction.

If your earned income is exactly $2,500 or less, you have no ACTC to claim that year. This is a hard floor — the credit does not begin until you cross it. Many part-time workers, seasonal workers, and parents returning to work partway through the year fall below this threshold.

Income limits and how the credit phases out

The ACTC begins to reduce once your modified adjusted gross income (MAGI) exceeds a certain threshold. For the 2023 tax year, that threshold was $400,000 for married couples filing jointly and $200,000 for all other filers. The credit reduces by $50 for every $1,000 (or fraction thereof) of income above the threshold.

This phase-out is separate from the regular Child Tax Credit phase-out, and it applies on top of it. If you are close to the income threshold, you may lose some or all of your ACTC even if you still may have access to for the regular credit. The IRS website publishes the current year's thresholds and phase-out rates in January.

Your MAGI for ACTC purposes is generally your adjusted gross income from your tax return. If you have foreign earned income or certain other adjustments, MAGI may differ from your raw income. Use the IRS instructions for Schedule 8812 to calculate your exact MAGI if you are uncertain.

Claiming the ACTC on your tax return

You claim the ACTC by filing Form 1040 (the main individual income tax return) along with Schedule 8812, which is titled "Credits for may have access to Children and Other Dependents." You cannot claim the ACTC without Schedule 8812, even if you file electronically. The schedule walks you through calculating your credit based on your earned income, number of may have access to children, and income level.

You must have a valid Social Security number for each child you claim, and the child must be a U.S. citizen, national, or resident alien. The child's name and SSN must match IRS records exactly, or the credit will be rejected. If you are filing jointly, both spouses must sign the return.

If you use tax preparation software or a tax preparer, they will ask you about your children and earned income, and the software or preparer will calculate and enter the ACTC automatically. If you prepare your return by hand, you will need to work through Schedule 8812 line by line, following the IRS instructions.

What happens if you received advance Child Tax Credit payments

From 2021 through 2022, the IRS sent advance payments of the Child Tax Credit to many families each month. If you received those payments, the amount you can claim as ACTC on your current return is reduced by the total advance payments you got. This is called "reconciliation," and it happens automatically when you file.

For example, if you received $3,600 in advance payments in 2021 and your total Child Tax Credit (regular plus additional) for that year is $4,000, you can only claim $400 on your return. If your credit is less than the advance payments you received, you may owe money back, though some taxpayers are protected from repayment under certain income thresholds.

The IRS mailed a letter (Form 6419) in January showing how much advance payment you received. Keep this letter with your tax records. If you did not receive a letter but think you got advance payments, contact the IRS at 1-800-829-1040 to request a transcript.

Common mistakes that delay or reduce your ACTC

The most frequent error is mismatching a child's name or Social Security number on the return. The IRS cross-checks every name and SSN against Social Security Administration records, and even a small difference — a middle initial, a nickname instead of the legal name, a transposed digit — will cause the credit to be rejected. Use the exact legal name and SSN from the child's Social Security card.

Another common mistake is claiming a child who does not meet the age requirement. The child must be under 17 on December 31 of the tax year. A child who turns 17 on December 31 does not may have access to for that year. Similarly, some parents claim children who are not U.S. citizens or residents, which also disqualifies them.

A third mistake is forgetting to file Schedule 8812 at all. If you file Form 1040 without Schedule 8812, the IRS will not process your ACTC claim, even if you are may have access to to it. The two forms must be filed together. If you discover you forgot Schedule 8812 after filing, you can file an amended return (Form 1040-X) with the schedule attached.

How the ACTC differs from other child-related tax benefits

The regular Child Tax Credit reduces your tax bill dollar-for-dollar, up to $2,000 per child. If your tax bill is $1,200 and you have one child, the credit wipes out your tax and leaves $800 unused. The Additional Child Tax Credit converts up to $1,700 of that unused credit into a refund, so you would receive $800.

The Earned Income Tax Credit (EITC) is a separate credit for low-income workers. You can claim both the ACTC and the EITC on the same return if you meet the requirements for each. The EITC has its own income limits and calculation rules, and it does not require you to have children, though having children increases the credit amount.

The Child and Dependent Care Credit is for expenses you paid for childcare while you worked. It is not the same as the Child Tax Credit or ACTC. You can claim the childcare credit and the ACTC in the same year if you have both may have access to expenses and may have access to children.

Frequently Asked Questions

Can I claim the ACTC if I did not work the whole year?

Yes, as long as you earned at least $2,500 during the year. If you earned $5,000 total from part-time work or seasonal employment, you can claim the ACTC based on that $5,000. The credit does not require you to have worked a full 12 months, only that you have earned income in the tax year.

What if my child was born in December — can I claim the ACTC for that year?

Yes. The child must be under 17 on December 31 of the tax year. A newborn in December qualifies for the full credit for that year. You will need the child's Social Security number to claim the credit, which you can obtain from the Social Security Administration after birth.

Do I have to file a tax return to get the ACTC?

Yes. The ACTC is claimed on your tax return, not through a separate process. If you earned less than the filing requirement for your age and filing status, you still must file a return to claim the ACTC. The IRS will not send you the credit unless you file.

Can I claim the ACTC for a grandchild or foster child?

Only if the child meets the IRS definition of a may have access to child, which includes biological children, stepchildren, adopted children, and foster children placed with you by an authorized agency. The child must live with you for more than half the year and be under 17. Grandchildren may have access to only if you have legal custody or the child lives with you and you provide more than half their support.

What if the IRS rejected my ACTC claim?

The most common reason is a name or Social Security number mismatch. Check the IRS notice you received to see the specific reason. If it was a data error, correct it and file an amended return (Form 1040-X) with the corrected information. If the rejection was for income or age reasons, you may not may have access to for the ACTC that year.