The Child Tax Credit can be refundable, but only partly, and only if you meet certain income thresholds

The Child Tax Credit is worth up to $2,000 per child under 17, but whether you get money back depends on how much you earned and whether you owe taxes. If the credit is larger than the taxes you owe, the IRS may send you the difference — but not the full difference. The refundable portion is capped at $1,700 per child for the 2023 tax year (this amount changes yearly). This refundable piece is called the Additional Child Tax Credit or the Refundable Child Tax Credit.

The key distinction: a non-refundable credit can only reduce your tax bill to zero. A refundable credit can push your refund into positive territory. The Child Tax Credit works as a hybrid — part of it is non-refundable, and part can come back to you as a refund if you earned enough to trigger it.

Key Takeaways

  • The Child Tax Credit is worth up to $2,000 per child, but only up to $1,700 of that can come back to you as a refund in most cases.
  • To receive any refundable portion, you must have earned income (wages, self-employment income, or certain other sources) and your income must be above a minimum threshold, which varies by filing status.
  • The refundable amount phases in at 15 percent of your income above the threshold, so lower earners may receive less than the full $1,700.
  • You claim the Child Tax Credit on your tax return using Form 1040 and Schedule 8812; you do not need to take a separate action to make it refundable.

How the refundable portion works

The refundable part of the Child Tax Credit is calculated on Schedule 8812, which you file with your tax return. The IRS looks at your earned income and compares it to a threshold amount. For the 2023 tax year, that threshold is $2,500 for most filers. If your earned income exceeds $2,500, you can claim 15 percent of the amount over that threshold, up to $1,700 per child.

Here is a concrete example: suppose you earned $10,000 and have one child. Your income over $2,500 is $7,500. Fifteen percent of $7,500 is $1,125. That $1,125 is your refundable Child Tax Credit — the amount the IRS will send back to you if you do not owe taxes. If you owed $500 in taxes, the $2,000 credit would first wipe out that $500, and then $1,125 would come back to you as a refund.

The threshold amount ($2,500) does not change based on how many children you have. The 15 percent calculation applies to all your children combined, but the refund is capped at $1,700 per child. So if you have three children and $10,000 in earned income, you could receive up to $5,100 in refundable credits (three children × $1,700), but only if your income calculation supports it.

Income thresholds and phase-in rules

You must have earned income to receive any refundable portion of the Child Tax Credit. Earned income includes wages from a job, net self-employment income, and certain other sources like taxable scholarship or fellowship grants. It does not include investment income, Social Security, unemployment benefits, or child support.

The $2,500 threshold applies to most filers for 2023. However, this threshold is adjusted yearly for inflation, so it may be different for the year you are filing. The IRS publishes the current threshold in the instructions to Form 1040 and on the Child Tax Credit worksheet.

If your earned income is below the threshold, you cannot claim the refundable portion, though you may still be able to claim the non-refundable portion if you owe taxes. For example, if you earned $1,800 and have one child, you would not may have access to for any refundable credit because your income is below $2,500. You could still use the full $2,000 credit to reduce any taxes you owe, but nothing would come back to you as a refund.

The difference between refundable and non-refundable

A non-refundable credit is like a coupon that can only reduce what you owe. If you owe $500 in taxes and have a $2,000 non-refundable credit, the credit wipes out the $500 and stops there — you do not get the extra $1,500. The credit cannot create a refund.

A refundable credit works like cash. If you owe $500 and have a $2,000 refundable credit, the credit covers the $500 and the IRS sends you the remaining $1,500. The Child Tax Credit is partially refundable: the first $1,700 (per child) can come back to you, but the remaining $300 (per child) cannot.

This matters most for lower-income filers who owe little or no tax. Without the refundable portion, they would lose the benefit of the credit entirely. The refundable portion ensures that even people who do not owe taxes can receive some benefit from having children.

How to claim the refundable Child Tax Credit on your return

You do not file a separate form or take a separate step to claim the refundable portion. When you file your tax return, you report the Child Tax Credit on Form 1040 (line 19 for tax year 2023, though line numbers change yearly). If you have earned income below the threshold or if your credit exceeds your tax liability, the IRS automatically calculates the refundable amount using Schedule 8812.

To claim the credit, you will need the Social Security number of each child, proof that they lived with you for more than half the year, and proof of your relationship to them (usually a birth certificate). You do not need to file Schedule 8812 yourself if you use tax software — the software will prompt you for the necessary information and generate the schedule automatically.

If you file by paper, you must include Schedule 8812 with your return if you think you might be due a refundable credit. The IRS will not calculate it for you if the form is missing, and you may lose the refund.

What changed in recent years

The refundable portion of the Child Tax Credit has been adjusted several times. For tax years 2021 and 2022, the refundable cap was temporarily raised to $1,600 per child. For 2023 and beyond, it returned to $1,700 per child. The threshold of $2,500 has remained stable, though it is adjusted for inflation each year.

These changes affect how much money comes back to you depending on when you file. If you are filing a return for a prior year, check the IRS website or the instructions for that specific year to find the correct refundable cap and threshold.

Frequently Asked Questions

Can I get the full $2,000 Child Tax Credit as a refund?

No. The maximum refundable portion is $1,700 per child (for 2023). The remaining $300 per child is non-refundable, meaning it can only reduce your tax bill, not create a refund. However, if you have multiple children or a higher earned income, you may receive close to the $1,700 cap per child.

What if I have no earned income?

If you have no earned income, you cannot claim the refundable portion of the Child Tax Credit. You may still claim the non-refundable portion (up to $2,000 per child) to reduce any taxes you owe, but nothing will come back to you as a refund. Earned income is required to unlock the refundable piece.

Do I need to do anything special to get the refund?

No. When you file your tax return and report the Child Tax Credit, the IRS automatically calculates whether you are due a refundable amount. If you use tax software, it will handle Schedule 8812 for you. If you file by paper, make sure Schedule 8812 is included with your return.

What counts as earned income for this purpose?

Earned income includes wages, salaries, tips, self-employment income, and certain taxable scholarships or fellowships. It does not include investment income, Social Security, pensions, unemployment benefits, or child support. The IRS defines earned income on the Schedule 8812 instructions.

Does the refundable amount change every year?

The refundable cap and the income threshold are adjusted yearly for inflation. For 2023, the cap is $1,700 per child and the threshold is $2,500. Check the IRS website or your tax software for the current year's amounts before you file.