Additional Child Tax Credit

The additional child tax credit is available for individuals whose child tax credit is greater than their federal income tax liability. The additional child tax credit is a refundable tax credit allowing taxpayers, if eligible, to get the non-refundable portion of the child tax credit. For example, if an individual has a non-refundable child tax credit of $5,000 and a tax liability of $3,000, the IRS will not refund the remaining $2,000, however, the taxpayer can claim an additional child tax credit up to $2,000. Additional child tax credit is subject to IRS limitations. For example, in 2010, the IRS limited the total additional child tax credit amount to 15 per cent of an individual’s taxable income (including combat pay, a tax-exempt income). Finally, individuals must earn a minimum income during the year to qualify for the additional child tax credit (e.g. $3,000 in 2010) Certain taxpayers (e.g. with three or more qualifying children) can be eligible for an additional child tax credit even if their income is lower than the IRS threshold. Taxpayers must complete and file IRS Form 8812 (“Additional Child Tax Credit”) to determine and claim any additional child tax credit.

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