Additional Child Tax Credit

Loading the player...

DEFINITION of 'Additional Child Tax Credit'

A refundable credit that can be claimed by taxpayers who are ineligible to claim the full non-refundable child tax credit, because it exceeds their total tax liability. The additional child tax credit was created to reimburse taxpayers for the non-refundable portion of their child tax credit.

The additional child tax credit is available to families with three or more qualified children.

BREAKING DOWN 'Additional Child Tax Credit'

The additional child tax credit is calculated by adding 15% of the taxpayer's taxable earned income to any tax-free combat pay. The total amount that is in excess of $11,750 (subject to annual adjustments for inflation) is refundable.

Even taxpayers with income below this threshold are eligible if they have at least three qualifying dependents and have paid Social Security tax in excess of the amount of their earned-income credit for the year. This credit is claimed on form 8812 and is also subject to the same phaseout limitations as the child tax credit.

RELATED TERMS
  1. Additional Personal Allowance

    In the United Kingdom, an extra deduction as set forth by HM ...
  2. IRS Publication 972: Child Tax ...

    A document published by the Internal Revenue Service (IRS) that ...
  3. Provincial Parental Insurance Plan ...

    A Canadian tax deduction relating to taxes that are paid or payable ...
  4. Earned Income

    Income derived from active participation in a trade or business, ...
  5. Earned Income Credit - EIC

    A tax credit in the United States which benefits certain taxpayers ...
  6. 1040 Form

    The standard Internal Revenue Service (IRS) form that individuals ...
Related Articles
  1. Retirement

    Raising Grandchildren A Financial Feat

    Becoming a full-time caregiver again presents many challenges - including making ends meet.
  2. Taxes

    Taxing Times For Divorced Parents

    Find out how to deal with the tax issues that arise for divorced parents with dependent children.
  3. Taxes

    Tax Deductions Vs. Tax Credits

    Understanding the difference between tax deductions and credits is crucial, as the tax strategies that you adopt now can favor one over the other and yield substantially different tax savings.
  4. Taxes

    5 Tax Credits You Shouldn't Miss

    If you're not taking advantage of these deductions, you could be missing out on tax savings.
  5. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  6. Options & Futures

    Budgeting For A New Baby

    This little member of your family will be a big expense. Find out what you need to budget for and how to save.
  7. Savings

    5 Ways To Save On Child Care Costs

    Child care costs can be a shock to new and expecting parents, but are some programs in place to help with the first few years.
  8. Investing News

    Obama Floats $10 a Barrel Oil Tax

    President Obama intends to propose a $10 a barrel tax on oil; consumers might have to cough up 25 cents more per gallon.
  9. Taxes

    Taxes: H&R Block Vs. TurboTax Vs. Jackson Hewitt

    There are more and more tax services to help ease the pain of filing income taxes. Here's our take on three of the biggest.
  10. Taxes

    Confused About Estimated Tax Deadlines for 2016?

    If you run a business or have investment income, pay attention to this year's estimated tax deadlines. Here are the details, and what's new for 2016.
RELATED FAQS
  1. How can I use a child tax credit?

    You may be able to reduce the amount of taxes you owe by up to $4,000, by claiming the child tax credit of up to $1,000 ... Read Full Answer >>
  2. How do I file taxes for income from foreign sources?

    If you are a U.S. citizen or resident alien, your income (except for amounts exempt under federal law), including that which ... Read Full Answer >>
  3. Are Flexible Spending Account (FSA) items tax deductible?

    Flexible Spending Accounts (FSAs) are employer-sponsored, tax-favored savings plans expressly for the future reimbursement ... Read Full Answer >>
  4. How Long Should I Keep My Tax Records?

    The Internal Revenue Service (IRS) has some hard and fast rules regarding how long taxpayers should keep their tax records. As ... Read Full Answer >>
  5. Are personal loans tax deductible?

    Interest paid on personal loans is not tax deductible. If you take out a loan to buy a car for personal use or to cover other ... Read Full Answer >>
  6. Does a Flexible Spending Account (FSA) cover braces?

    Funds from a Flexible Spending Account (FSA) can be used to cover costs associated with installing, maintaining and removing ... Read Full Answer >>
Hot Definitions
  1. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  2. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  3. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  4. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  5. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
Trading Center