What is Additional Child Tax Credit?

The additional child tax credit comes into play if you're eligible for the child tax credit, but you don't owe much in taxes. The additional child tax credit allows you to claim a refund up to the $1,000, if your earned income for the year was more than $3,000.

Generally, additional child tax credit is 15 percent of the amount of your income over $3,000, with a cap equal to the unused portion of your child tax credit, up to $1,000.

Let's say, you earned $10,000, your income over $3,000 is $7,000. Fifteen percent of $7,000 is $1,050. Because $1,050 is more than the maximum credit of $1,000 you would qualify for $1,000 for both "child tax credit" and "additional child tax credit"

For example, you might qualify for the full $1,000 credit but owe $100 in tax liability. The child tax credit erases your $100 tax liability, and $900 balance would be refunded to you.

The additional child tax credit essentially turns a portion of child tax credit into a refundable credit.

If, however, you have three or more qualifying children, you can calculate the additional child tax credit a different way, calculating the differences between your withheld Social Security and Medicare taxes, and any earned income tax credit you received up to the amount of the unused portion of your child tax credit.

Our software will calculate the most favorable result for you.