How the ACTC Works

The Additional Child Tax Credit exists because the regular child tax credit on Line 19 is nonrefundable — it can reduce your tax to zero but not below. Many lower-income families have a child tax credit that exceeds their tax liability, which means the nonrefundable credit alone does not deliver the full benefit. The ACTC fills this gap by making up to $1,700 of the unused credit refundable. This means you can receive it as a cash refund even if you owe no federal income tax.

The refundable amount is calculated on Schedule 8812. It is the lesser of your unused child tax credit amount or 15% of your earned income above $2,500. For families with three or more qualifying children, an alternative calculation using excess Social Security taxes may produce a larger credit. The $2,500 earned income threshold means that a family must have at least some earned income to receive the refundable portion.

Eligibility Requirements

The qualifying child requirements for the ACTC mirror those of the regular child tax credit: the child must be under 17, have a valid Social Security number, and meet the relationship, residency, and support tests. The child must be a U.S. citizen, national, or resident alien. Children with ITINs rather than Social Security numbers do not qualify for the ACTC or the child tax credit, though they may qualify for the $500 credit for other dependents on Line 19.

Refund Timing and PATH Act

Like the EITC, refunds that include the Additional Child Tax Credit are subject to the PATH Act delay. The IRS cannot issue these refunds before mid-February, regardless of when the return is filed. This provision was enacted to combat fraud by giving the IRS additional processing time to verify claims. Taxpayers should plan accordingly and not rely on early refund dates for returns that include Line 28 amounts.