Quick overview
The refundable portion of the Child Tax Credit (often claimed through the Additional Child Tax Credit calculation) is designed to put money into the hands of families who have low or no federal income tax liability. If you qualify, the refundable portion can be claimed on your federal income tax return and may result in a refund even when you didn’t owe tax.
Authoritative sources and tools: see the IRS Child Tax Credit page and the IRS Additional Child Tax Credit guidance for the most current rules (irs.gov/credits-deductions/individuals/child-tax-credit and irs.gov/forms-pubs/about-schedule-8812). This article summarizes the rules, the documentation you should collect, filing steps, common pitfalls, and practical tips based on professional experience.
Who can get the refundable portion of the Child Tax Credit?
- Qualifying child: The child must meet the qualifying child tests (relationship, age under 17 at the end of the tax year, residency, support, and joint-return rules). A qualifying child generally must have a valid Social Security number issued before the due date of your return (including extensions). (IRS guidance: Child Tax Credit page.)
- Income and phaseouts: The base CTC begins to phase out for single filers with modified adjusted gross income (MAGI) above $200,000 and for married couples filing jointly above $400,000. Even if the full $2,000 credit phases down for higher incomes, a portion may remain nonrefundable.
- Refundability test: The refundable portion is limited by the Additional Child Tax Credit rules. For 2023, up to $1,600 per qualifying child may be refundable, but actual refundability is subject to the earned-income calculation (generally a percentage—historically 15%—of earned income above a threshold such as $2,500). Use Schedule 8812 to compute the refundable amount. (See IRS Schedule 8812.)
Note: Rules, thresholds, and dollar amounts change with legislation and inflation adjustments. Confirm the tax year rules on the IRS site before filing.
What documentation should you collect before filing?
Gather this documentation to support a CTC claim and to speed processing:
- Social Security numbers (SSNs) for each qualifying child and the taxpayer(s). Qualifying children must have SSNs issued before the filing due date. If a child has only an ITIN, they generally do not qualify for the CTC. (IRS requirement.)
- Birth certificates or adoption records to prove a child’s age and relationship.
- Proof of residency: school records, medical records, or other documents showing the child lived with you for more than half the year (particularly important in custody or split-residence cases).
- Proof of earned income: pay stubs, W-2s, 1099s to support the earned income portion of the refundable calculation.
- Custody and support documents: divorce decrees, custody orders, or written agreements that clarify who may claim the child. See our guide on allocating credits in shared custody situations for more detail: Child Tax Credit Allocations in Shared Custody Situations (https://finhelp.io/glossary/allocating-child-tax-credits-in-shared-custody-situations/).
- Prior-year tax returns (if amending): If you missed claiming the refundable portion in a prior year, collect that year’s return and W-2s/1099s; you may need to file an amended return. See our article on amending returns for credits: Amending Returns to Claim Missed Credits (https://finhelp.io/glossary/amending-returns-to-claim-missed-credits-child-tax-and-eitc/).
Keep all records for at least three years after filing; the IRS can request documentation to substantiate claims.
Step-by-step: How to claim the refundable portion on your tax return
- Confirm that each child is a qualifying child for the tax year.
- Complete Form 1040 (or Form 1040-SR).
- Calculate the nonrefundable Child Tax Credit on Form 1040 following the instructions. If the credit reduces your tax below zero, a portion may be refundable.
- Complete Schedule 8812 (Credits for Qualifying Children and Other Dependents). Schedule 8812 walks you through the Additional Child Tax Credit (ACTC) calculation and determines how much of the credit can be refunded. (IRS: About Schedule 8812.)
- Attach any required documentation if the IRS specifically requests it. Normally you don’t send birth certificates or custody agreements with the return unless the IRS asks; however, keep them ready in case of an audit or information request.
- File your return (electronically is faster and reduces errors). If you have no federal income tax liability but qualify for refundability, you must still file Form 1040 to claim the refundable portion.
Practical note from my practice: Filing electronically and using reputable tax software or a tax professional reduces calculation errors and speeds processing. If you filepaper, allow extra processing time.
Special situations and common pitfalls
- No SSN for the child: If the qualifying child does not have an SSN (only an ITIN) by the return due date, you cannot claim the CTC for that child. Apply early for SSNs when you have a newborn or adopted child.
- Shared custody: For separated or divorced parents, only one person can claim the child for the CTC in a single tax year. The custodial parent (the one the child lived with most of the year) generally claims the child unless a signed Form 8332 or similar release is used. See our custody allocation guide: Allocating Child Tax Credits in Shared Custody Situations (https://finhelp.io/glossary/allocating-child-tax-credits-in-shared-custody-situations/).
- Identity verification and IRS notices: The IRS has been more aggressive about identity verification for refundable credits. If the IRS questions your claim, they may send notices (for example, CP08 or CP177B in cases of suspected misreporting). Review and respond promptly; the FinHelp article on CP177B explains typical reasons and remediation steps: CP177B Penalty for Incorrect Child Tax Credit Reporting (https://finhelp.io/glossary/cp177b-penalty-for-incorrect-child-tax-credit-reporting/).
- Earned-income requirement: The refundable calculation commonly depends on a percentage of earned income above a small threshold (traditionally $2,500). If you have low or no earned income, your refundable amount may be limited even if you qualify for the nonrefundable portion.
- Filing late or not at all: You must file a return to claim a refund. If you failed to file in prior years when eligible for the refundable portion, you can generally file amended returns to claim missed credits for up to three years from the original filing due date. See our guide: Amending Returns to Claim Missed Credits (https://finhelp.io/glossary/amending-returns-to-claim-missed-credits-child-tax-and-eitc/).
Example calculation (illustrative)
This is an illustrative example using 2023 limits to show the mechanics. It is not a substitute for the IRS worksheets.
- A taxpayer has two qualifying children under age 17. Maximum CTC = 2 × $2,000 = $4,000.
- Tax before credits = $3,400.
- Applying the nonrefundable portion of the CTC reduces tax owed to $400.
- Remaining CTC = $4,000 − $3,400 = $600. If the refundable cap is $1,600 per child (total cap $3,200), and if the earned-income calculation allows the $600 refund, the taxpayer receives $600 back as a refund.
If instead the family’s tax liability were $0 and the earned-income calculation allowed $1,600 per child, they could receive the refundable limit subject to the ACTC worksheet.
Use Schedule 8812 and the IRS instructions for exact math (note: the ACTC calculation uses earned income and phase-in rates).
Timeline and what to expect after filing
- Electronic filing typically speeds processing; refunds are usually issued within a few weeks but can be delayed for identity verification, missing SSNs, or other inconsistencies.
- The IRS may request documents. Don’t mail supporting documents unless the IRS asks. Keep originals and certified copies for your records.
- If the IRS denies your refundable claim, you will receive a notice that explains why and how to appeal or provide additional documentation.
When to get professional help
- Complex custody arrangements or multiple claimants for the same child.
- Discrepancies between what was claimed on IRS records and what you claim (e.g., IRS sending CP08/CP177B notices).
- If you believe you are eligible but the IRS rejected your refund claim.
In my practice, clients who bring the documentation listed above and file electronically with Schedule 8812 rarely experience avoidable delays. A tax professional can help ensure you use the correct dependent claim rules, compute the refundable amount properly, and respond to IRS notices promptly.
Quick checklist before you file
- Confirm each child’s SSN and birthdate.
- Collect proof of residency and earned-income records.
- Review custody, divorce, or separation agreements if applicable.
- Prepare Form 1040 and Schedule 8812 (ACTC worksheet).
- File electronically and retain records for at least three years.
Resources and authoritative links
- IRS — Child Tax Credit (CTC): https://www.irs.gov/credits-deductions/individuals/child-tax-credit
- IRS — About Schedule 8812, Additional Child Tax Credit: https://www.irs.gov/forms-pubs/about-schedule-8812
- Consumer Financial Protection Bureau — Managing tax-time refunds and identity protection (for general consumer guidance): https://www.consumerfinance.gov/
Professional disclaimer: This article is educational and summarizes general federal rules current as of 2025. It is not individualized tax advice. Tax laws change and state rules vary; consult a qualified tax professional or the IRS for advice tailored to your situation.
If you need targeted help preparing to claim a refund or responding to an IRS notice, consult a tax advisor or use FinHelp’s related guides on custody allocation and amending returns linked above.
