What is the Additional Child Tax Credit (ACTC)?

If you’re a parent or guardian filing taxes, you’ve probably heard of the Child Tax Credit (CTC). But what happens if the CTC reduces your tax bill to zero, and there’s still some credit left unused? That’s where the Additional Child Tax Credit, or ACTC, comes in.

Let’s break down how the ACTC works, who qualifies, and what you need to know for the 2024 and 2025 tax years.

At a glance:

• The ACTC is the refundable portion of the Child Tax Credit.
• Making part of the CTC refundable ensures low-income filers can still take advantage of the credit, even if they don’t make enough to owe federal income tax.
• The ACTC is worth $1,700 for tax years 2024 and 2025.

How the ACTC works

Is the Additional Child Tax Credit refundable?

Yes! The Additional Child Tax Credit refers to the refundable portion of the Child Tax Credit. Essentially, it’s a refundable tax credit that allows qualifying taxpayers to still get a full or partial refund even if they don’t owe any tax.

Unlike the nonrefundable credit portion of the CTC, which can only reduce your tax bill to $0, the ACTC allows you to receive a refund even if the credit is more than the tax you owe. This ensures that families with lower tax obligations can still benefit from the credit.

So, if you don’t owe enough taxes to use up the full Child Tax Credit, the ACTC can make up the difference by giving you a refund check.

Who qualifies for the Additional Child Tax Credit?

Eligibility for the ACTC is determined through the same criteria as the CTC, and you will need to complete Schedule 8812 to apply.

Not every family will qualify for the ACTC, but many do. To qualify for the ACTC, you must earn more than $2,500 from work (including wages, tips, or net self-employment income). That $2,500 is the minimum income required to be eligible — it’s called the refundability threshold.

Here’s a closer look at the basic requirements:

• Your child must meet the CTC eligibility rules. A qualifying child must:
  • Be under age 17 at the end of the tax year.
  • Be your son, daughter, stepchild, foster child, sibling, stepsibling, grandchild, niece, or nephew.
  • Be claimed as your dependent.
  • Have lived with you for more than half the year, and you provided at least half of their financial support.
  • Be a U.S. citizen, national, or U.S. resident alien.
• You must have earned income of at least $2,500 for the tax year. This is key! If your earned income is below that threshold, you can’t claim the ACTC (even if you have a qualifying dependent).
• You (and your spouse, if married filing jointly) can’t claim the CTC if you file Form 2555 or Form 255-EZ excluding foreign earned income.
• You must file Form 1040 or 1040-SR and attach Schedule 8812 to calculate and claim the credit.

If that sounds complicated, don’t worry. TaxAct® does these calculations and pulls the necessary tax forms for you when you e-file your federal income tax return with us.

How much is the Additional Child Tax Credit for 2024 and 2025?

For the 2024 and 2025 tax years, the maximum ACTC is up to $1,700 per qualifying child (the full CTC is worth $2,000). This amount is based on any unused portion of the Child Tax Credit after it’s applied to your tax liability.

Both the CTC and ACTC credits begin to phase out once your modified adjusted gross income (AGI) reaches:

• $200,000 for single filers
• $400,000 for married couples filing a joint return

Example ACTC calculation

Once you earn above $2,500, the IRS gives you 15 cents back for every dollar you earn over that amount, up to a maximum of $1,700 per qualifying child (for the 2024 and 2025 tax years).

Here’s a quick example:

• You earn $10,000 from a job.
• Subtract the $2,500 threshold: $10,000 – $2,500 = $7,500.
• Take 15% of that: $7,500 × 0.15 = $1,125.
• So, in this example, you could qualify for up to $1,125 of the ACTC, assuming you have at least one child who meets the rules.

The more you earn (past $2,500), the higher your ACTC will be until you hit the max of $1,700 per child. Remember, if you earn less than $2,500 during the year, you don’t qualify for the ACTC.

As you can see, the actual calculation gets a bit complicated, but don’t worry — that’s what tax preparation software like TaxAct is for. We’ll help you crunch the numbers and claim the ACTC without stress.

How to claim the Additional Child Tax Credit

TaxAct makes it easy to claim the ACTC if you qualify. You don’t need to memorize IRS rules or do any complicated math. We’ll do the heavy lifting — you just need to answer some easy questions about your kids, earned income, and filing status to determine whether you meet all the eligibility requirements.

If all looks good, you’ll see a screen like the one below:

If you qualify for the ACTC, TaxAct will automatically apply it to your return — it’s that easy!

Additional Child Tax Credit FAQs

When will I get my ACTC refund?

If you prefer to file early, claiming the ACTC may slightly delay your refund. Due to the PATH Act (Protecting Americans from Tax Hikes Act), the IRS is required to postpone issuing refunds for income tax returns that claim the Additional Child Tax Credit (ACTC) or the Earned Income Tax Credit (EITC) until mid-February, even if you file your return early.

For example, if you filed your taxes on IRS open day (typically late January) in 2025 and claimed the ACTC or EITC, you likely won’t see your tax refund until at least Feb. 17, 2025, or later. Of course, your exact refund date also depends on weekends, holidays, and how fast your bank processes the deposit.

Basically, if you’re claiming the ACTC, don’t count on that refund money until at least mid-to-late February, and plan your budget accordingly!

Do I need to fill out a special form to claim the ACTC?

Yes. You must file a Form 1040 or 1040-SR and include Schedule 8812, which calculates both your Child Tax Credit and any refundable ACTC. Don’t stress — TaxAct can guide you through this and fill out the forms for you.

Is the ACTC taxable?

No, the Additional Child Tax Credit is not taxable.

Does self-employment income count toward the $2,500 minimum?

It does, but only your net self-employment income counts toward the $2,500 threshold. In other words, your profit after expenses and after subtracting half your self-employment taxes.

Can I still get the ACTC if I only earned a small amount?

As long as you earned more than $2,500, you may qualify for a partial credit. Unfortunately, you’re not eligible for the ACTC if you earn less than that.

Is the ACTC the same every year?

Not always. The ACTC is indexed for inflation, meaning the maximum refundable amount per child can change from year to year.

Other factors can cause changes, too — for example, during the pandemic, the American Rescue Plan briefly expanded the CTC, making it fully refundable and worth up to $3,600 per child while lowering the income limits.

Both the CTC and ACTC have undergone significant changes in recent years. Most recently, the Tax Cuts and Jobs Act (TCJA) temporarily changed the credit amounts and modified adjusted gross income (MAGI) phase-out requirements for both credits starting in 2018. If Congress does not extend the TCJA beyond 2025, the credit amounts will revert to what they were before 2018.

Can I claim the ACTC for a dependent who isn’t my child?

No, the ACTC is only available for qualifying children under age 17 who meet specific IRS rules, including having a valid Social Security number (SSN). You can’t claim the ACTC for other dependents, such as older children, elderly parents, or relatives who live with you.

However, if your dependent is not a child or has an individual taxpayer identification number (ITIN) instead of a valid SSN, you might still qualify for the Credit for Other Dependents (ODC). The ODC is a nonrefundable credit worth up to $500 per qualifying person. It won’t increase your refund like the ACTC, but it can still reduce what you owe!

The bottom line

The Additional Child Tax Credit is a valuable tax benefit for families with lower tax bills. If you didn’t get the full Child Tax Credit because your tax owed was too low, the ACTC could make up the difference.

Just remember: It’s only available if you meet the income threshold, and it may delay your tax refund until mid-February or later. Use that knowledge to plan ahead and let TaxAct help you claim it without the headache.

Ready to file your individual income tax return and claim your ACTC? Start your return with TaxAct, and we’ll help you get every dollar and tax break you deserve.

This article is for informational purposes only and not legal or financial advice.

All TaxAct offers, products and services are subject to applicable terms and conditions.

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