If you’re a parent or guardian filing taxes, chances are you’ve heard of the Child Tax Credit (CTC) — and maybe the Additional Child Tax Credit (ACTC), too. But what’s the difference between the CTC and ACTC? How do you know which one applies to you, and how can you claim them?
What is the Child Tax Credit (CTC)?
The CTC is a tax credit that helps reduce your tax bill based on the number of qualifying children you have. For 2024 and 2025, it’s worth up to $2,000 per child and partially refundable.
To qualify for the CTC:
- You must claim the child as a dependent on your return (you provided at least half of their financial support).
- The child must be a U.S. citizen, national, or resident alien and have a
- Social Security number (SSN).
- You must meet certain income limits.
What is the Additional Child Tax Credit (ACTC)?
The ACTC is the refundable portion of the Child Tax Credit. If the CTC reduces your taxable income to zero and you still have unused credit left, you may be able to get that leftover amount as a refund through the ACTC — up to $1,700 per qualifying dependent for tax years 2024 and 2025.
To qualify for the ACTC:
- You must meet all CTC eligibility requirements.
- Your earned income for the year must be at least $2,500.
Think of the ACTC as an add-on or backup to the CTC. If you qualify for the full CTC and don’t need the ACTC, great! You’ve likely already shaved a big chunk off your tax bill.
But if you can’t use the full CTC because you owe little to no tax, the ACTC kicks in and can put money back in your pocket (unlike a nonrefundable tax credit, which can only reduce your tax liability to zero). This matters a lot if you have lower income or more kids than tax liability.
Many taxpayers qualify for both the CTC and ACTC in the same tax year. For example, if you’re eligible for the full credit of $2,000 but only owe $400 in taxes, you’ll use $400 of the credit to reduce your liability to zero. You may then be eligible to claim the remaining $1,600 as a refundable credit through the ACTC.
Here’s a simple way to remember the difference between the Child Tax Credit and the Additional Child Tax Credit:
- The CTC helps reduce the tax you owe.
- The ACTC helps you get money back if your tax bill isn’t high enough to use the full CTC.
- And yes, you can qualify for both tax breaks!