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The Additional Child Tax Credit

 

The Additional Child Tax Credit

A Refundable Tax Credit for Parents

by Jason Summers

If you have children, you may be able to lower your tax bill by claiming the Child Tax Credit. The Child Tax Credit is a non-refundable credit, which means it cannot reduce your tax balance below zero dollars.

However, if you are unable to take full advantage of the Child Tax Credit (because the amount of your credit is more than the amount of income tax you owe), you may be able to claim the Additional Child Tax Credit as well. With the Additional Child Tax Credit, you may receive a payment for the portion of the Child Tax Credit that was not used to offset your taxes.

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Here is some information about the Additional Child Tax Credit and how it works:

The (Regular) Child Tax Credit

The Child Tax Credit is worth up to $1,000 for each qualifying child. Remember that a tax credit reduces your tax liability dollar-for-dollar – so a $1,000 tax credit actually takes $1,000 off of your tax balance.

However, since the Child Tax Credit is non-refundable, it cannot reduce the tax you owe beyond $0. In other words, if your tax liability is $500 and you claim the Child Tax Credit, your liability will be reduced to $0 (meaning you can only take half of the credit). This is where the Additional Child Tax Credit comes into play.

The Additional Child Tax Credit

If the amount of your Child Tax Credit is more than the amount of tax you owe, you may be eligible to claim the Additional Child Tax Credit, allowing you to receive a payment (i.e. tax refund) for the unused portion of your Child Tax Credit.

The Additional Child Tax Credit is a refundable credit, which means it can reduce your tax balance below zero and result in a tax refund. Basically, if you have any portion of your Child Tax Credit “left over,” you may be eligible to receive some or all of it as a payment through the Additional Child Tax Credit.

The Additional Child Tax Credit may bring you a tax refund even if you don’t owe any tax. However, if you are able to claim the full amount of the Child Tax Credit, you will not be eligible for the Additional Child Tax Credit.

Note that the Additional Child Tax Credit is not a credit for additional children. It is a credit in addition to the regular Child Tax Credit. See IRS Publication 972 (Child Tax Credit) for more information about the Child Tax Credit and the Additional Child Tax Credit.

To calculate and claim your Additional Child Tax Credit, use Schedule 8812.

RELATED: Tax Breaks for Parents

Schedule 8812 (Child Tax Credit)

In order to claim the Child Tax Credit and the Additional Child Tax Credit, you must file Form 1040, Form 1040A, or Form 1040NR as your income tax return. (You cannot use Form 1040-EZ or Form 1040NR-EZ.)

Before you can determine your eligibility for the Additional Child Tax Credit, you must first calculate the amount of your Child Tax Credit. You can use the “Child Tax Credit Worksheet” included in the Instructions for Form 1040. If you answer “Yes” on Line 9 or Line 10 of the Worksheet, use Parts II-IV of Schedule 8812 (Child Tax Credit) to see if you qualify for the Additional Child Tax Credit.

Parts II-IV of Schedule 8812 will help you figure the amount of your Additional Child Tax Credit. If you have an Additional Child Tax Credit on Line 13 of Schedule 8812, you should report it on the appropriate line of your 1040 tax return.

For more information, see the Instructions for Schedule 8812 (Child Tax Credit).