Additional Child Tax Credit


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.


Loading the player...

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.

  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. Child Tax Credit

    A credit given to taxpayers for each dependent child that is ...
  6. Earned Income Credit - EIC

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

    5 Tax Credits You Shouldn't Miss

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

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  5. 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.
  6. 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.
  7. Economics

    Explaining Corporate Tax

    A corporate tax is a tax levied on the profits a corporation generates.
  8. Retirement

    What to Do When Your Doctor Doesn't Take Medicare

    Stay and pay the full fee? Cut and run to another provider? Five ways to cope when Medicare threatens to break up you and your medico.
  9. Taxes

    The 5 Countries Without Income Taxes

    Discover information on some of the best countries to consider relocating to that offer the financial benefit of charging no income tax.
  10. Personal Finance

    Top Resorts for Multigenerational Family Vacations

    After a week at one of these resorts that cater to families of all ages, you might swear off those exhausting road trips to Grandma’s for good.
  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. Why is the Cayman Islands considered a tax haven?

    The Cayman Islands is one of the most well-known tax havens in the world. Unlike most countries, the Cayman Islands does ... Read Full Answer >>
  3. Why is Luxembourg considered a tax haven?

    Luxembourg has been the tax haven of choice for many corporations and mega-rich individuals around the world since the 197 ... Read Full Answer >>
  4. Why is Panama considered a tax haven?

    The Republic of Panama is considered one of the most well-established pure tax havens in the Caribbean due to extensive legislation ... Read Full Answer >>
  5. How do I get out of my annuity and transfer to a new one?

    If you decide your current annuity is not for you, there is nothing stopping you from transferring your investment to a new ... Read Full Answer >>
  6. Are Cafeteria plans exempt from Social Security?

    Typically, qualified benefits offered through cafeteria plans are exempt from Social Security taxes. However, certain types ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  2. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  3. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  4. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  5. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!