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 $1,400, if your earned income for the year was more than $2,500.
Generally, additional child tax credit is 15 percent of the amount of your income over $2,500, with a cap equal to the unused portion of your child tax credit, up to $1,400.
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.