The Child Tax Credit is partially refundable, meaning you can get money back even if you owe no tax

The Child Tax Credit works in two parts. The first part — up to $2,000 per child — reduces the tax you owe. If that credit is larger than your tax bill, you do not get the leftover as a refund; it straightforward disappears. But the second part, called the Additional Child Tax Credit or refundable portion, can send you money even if you owe nothing. This refundable piece is worth up to $1,700 per child for the 2024 tax year, though the exact amount depends on your income and how many children you claim.

The reason this matters: a family with three children and no tax liability could still receive a refund of several thousand dollars because of the refundable portion. A family with the same children but a large tax bill might receive less or nothing, because the credit first pays down what they owe. The refundable and non-refundable pieces work together, and understanding which part applies to you determines whether you see money back or just a reduction in what you owe.

Key Takeaways

  • The Child Tax Credit has a refundable portion (Additional Child Tax Credit) worth up to $1,700 per child in 2024, which can result in a refund even if you owe no federal income tax.
  • The non-refundable portion, up to $2,000 per child, only reduces your tax bill and does not produce a refund if the credit exceeds what you owe.
  • Your income level determines how much of the credit is refundable; the refundable amount phases out as income rises above $400,000 for married filers and $200,000 for single filers.
  • You must have earned income to claim the refundable portion; if you had no income or only unearned income like interest, you cannot receive the refundable credit.
  • The refundable portion is calculated on Form 8812, which you file with your tax return if you think you are owed money beyond your non-refundable credit.

How the refundable and non-refundable portions work together

When you claim the Child Tax Credit, the IRS first applies the non-refundable portion to reduce your tax liability. If you owe $1,200 in federal income tax and claim $2,000 in credit for one child, that $2,000 wipes out your $1,200 bill and leaves $800 unused. That $800 does not come back to you as a refund — it is straightforward lost.

The refundable portion then steps in. If you have earned income, you may be able to claim the Additional Child Tax Credit on Form 8812. This refundable piece is calculated separately and can produce a refund. For 2024, the maximum refundable amount is 15 percent of your earned income above $2,500, up to $1,700 per child. So if you earned $20,000 and have one child, your refundable credit would be 15 percent of $17,500 ($20,000 minus $2,500), which equals $2,625 — but capped at $1,700. That $1,700 can come back to you as a refund, even if you owed no tax.

The two pieces are not separate claims. You file one tax return, claim all your children on Schedule 8812, and the IRS calculates both the non-refundable credit (which reduces your tax) and the refundable credit (which may produce a refund). The refund you receive is the refundable portion only, minus any tax you still owe after the non-refundable credit is applied.

Income limits that affect the refundable amount

The refundable portion of the Child Tax Credit does not disappear entirely at high incomes the way some credits do, but it does shrink. For 2024, the refundable amount begins to reduce when your modified adjusted gross income (MAGI) exceeds $400,000 if you are married filing jointly, or $200,000 if you are single, head of household, or married filing separately. For every $1,000 (or fraction of $1,000) over that threshold, the refundable credit decreases by $50 per child.

This is different from the non-refundable portion, which phases out at lower income levels: $400,000 for married filers and $200,000 for others. Because the refundable portion has higher thresholds, some families with moderate to high incomes may lose the non-refundable credit entirely but still receive part of the refundable credit.

Your MAGI is usually your adjusted gross income (AGI) from your tax return. If you are unsure whether you are over the threshold, calculate your AGI first, then check the IRS instructions for Form 8812 to see how the refundable credit applies to your situation.

You must have earned income to receive the refundable portion

The refundable Child Tax Credit is tied to earned income — wages, salary, self-employment income, or taxable scholarship income. If you had no earned income in 2024, you cannot claim the refundable portion, even if you have children and would otherwise may have access to for the non-refundable credit.

Income from investments, rental property, Social Security, unemployment benefits, or other unearned sources does not count toward the earned income requirement. A parent who stayed home to raise children and had no income cannot claim the refundable credit, though they may still claim the non-refundable portion if they file a joint return with a spouse who earned income.

If you are self-employed, your net profit from Schedule C counts as earned income. If you are unsure whether your income qualifies, check the IRS instructions for Form 8812 or speak with a tax professional who can review your specific situation.

How to claim the refundable portion on your tax return

You claim the refundable Child Tax Credit by filing Form 8812, Additional Child Tax Credit, with your Form 1040. You do not file a separate process or request; Form 8812 is part of your annual tax return.

On Form 8812, you enter the number of may have access to children, your earned income, and your tax liability. The form walks you through the calculation of the refundable amount. If you use tax software (TurboTax, H&R Block, TaxAct, or others), the software usually asks you questions about your children and income and automatically calculates and files Form 8812 if you are owed a refundable credit.

You must file a complete tax return to claim the refundable credit, even if you would normally not be required to file. If your only income is from a job and your employer withheld tax, you may be due a refund, and filing is how you receive it. If you did not have tax withheld and owe nothing, you still need to file to claim the refundable credit.

What happens if you received advance payments in prior years

From 2021 through 2024, the IRS sent advance Child Tax Credit payments to many families — monthly checks or deposits during the year. These advances were based on your 2020 tax return and estimates of your 2021 income. When you file your 2024 return, you reconcile those advance payments against the credit you actually owe.

If you received more in advance payments than your actual credit for 2024, you may owe money back when you file. If you received less, you may receive the difference as a refund. The reconciliation happens automatically on your tax return; you do not need to take any separate action, but you do need to file to settle the account.

Keep any letters or notices the IRS sent you about advance payments. These show how much was paid to you and help you understand why your refund is larger or smaller than expected.

Frequently Asked Questions

Can I get the full $2,000 credit back as a refund?

No. The full $2,000 is non-refundable, meaning it only reduces your tax bill. The refundable portion is separate and capped at $1,700 per child for 2024. You can receive up to $1,700 per child as a refund, not the full $2,000.

What if I have no tax liability and no earned income?

You cannot claim the refundable portion of the credit without earned income. You may still claim the non-refundable portion if you file a joint return with a spouse who earned income, but that will only reduce their tax bill, not produce a refund for you.

Do I have to file Form 8812 separately, or does my tax software do it?

Tax software handles Form 8812 automatically if you answer questions about your children and income. You do not file it separately; it is included with your Form 1040 when you submit your return. If you file by hand, you must complete Form 8812 yourself and attach it to your return.

If I owe back taxes, will my refund be taken to pay them?

Yes. If you owe federal income tax from a prior year, state income tax, child support, or certain other debts, the IRS can offset your refund to pay those obligations. You will receive a notice if this happens. Contact the IRS or the agency holding the debt to understand what was taken and why.

Does the refundable credit change every year?

The maximum refundable amount and income thresholds can change year to year. For 2024, the maximum is $1,700 per child. Check the IRS website or Form 8812 instructions each year to confirm the current amounts before you file.