If you take care of a child or are someone’s parent, then in the year 2025 you can get an additional child care credit of Rs 1700. The special thing is that even if you do not pay tax and do not have to pay the text at all, you may still be entitled to this refund. To take proper advantage of this credit it is very important to understand its rules and procedures.
| Feature | Details |
|---|---|
| Maximum Refund | Up to $1,700 per qualifying child |
| Earned Income Threshold | Must earn more than $2,500 |
| Refund Calculation | 15% of earned income above $2,500, up to $1,700 |
| Income Limits | Phase-out starts at $200,000 (single) and $400,000 (married filing jointly) |
| Qualifying Age | Child must be under age 17 |
| Filing Forms | File Form 1040 with Schedule 8812 |
| When Refund Is Issued | After mid-February 2025 for returns claiming ACTC |
| IRS Resource | IRS Refundable Credits |
What is ACTC and why is it important?
The Child Tax Credit (CTC) gives you a tax rebate of up to $2,000 on one child. But suppose you did not pay this much tax – will you be deprived of this amount? No, because only then ACTC, i.e. the refundable part of the Child Tax Credit, comes in handy. This means that if your tax is completely exhausted by the CTC, some portion of the remaining credit (up to $1,700 per child) may be available to you as a cash refund.
Eligibility criteria for ACTC in 2025
1. Child-related requirements:
- The child must be under 17 years of age
- Can be your own child, stepchild, adopted child, grandchild, nephew/niece, or sibling
- The child must have lived with you for more than half of the year
- He or she must not have paid for more than half of his or her own expenses
- The child must be a US citizen or legal resident and has a valid Social Security Number (SSN)
2. Earned income requirements:
- Your income must be more than $2,500
- Note that only income from a job or personal work will be considered, not from investments or interest
3. Income limits:
If your annual income is high, the amount of ACTC can be reduced:
- Income over $200,000 (single or head of household)
- More than $400,000 (married joint) Filing)
- The credit will be reduced by $50 for every $1,000 of additional income.
How is ACTC calculated?
Formula:
ACTC = 15% × (earnings – $2,500), up to $1,700 per child
Example:
If your total income is $10,000 and you have one qualifying child:
- $10,000 – $2,500 = $7,500
- 15% of $7,500 = $1,125
This means you can get an ACTC refund of $1,125 per child.
How to claim ACTC – Step by step guide
Step 1: Fill out Form 1040
Even if your income is very low, you still have to file a tax return.
Step 2: Attach Schedule 8812
This form will tell you how much credit you should get in the CTC and ACTC.
Step 3: File on time
The 2025 tax deadline is April 15. Filing early will get you a quicker refund. Note that the IRS may hold refunds for returns that include the ACTC and EITC until mid-February to prevent fraud.
Tips to make the most of your ACTC refund
- Enter your child’s Social Security number correctly
- If you’re confused, ask a tax professional for help or use free tax software
- Avoid claiming the wrong income or an ineligible child – this can lead to an audit
FAQs – Common questions people have
What if I make less than $2,500?
You won’t be eligible for the ACTC because it has a minimum income requirement.
Can I get the ACTC if I don’t owe taxes?
Yes! The ACTC is a refundable credit, meaning you can get money back even if you don’t owe taxes.
Are ACTC and CTC different?
The ACTC is part of the CTC — the refund you get if the CTC eliminates taxes.
Is it necessary to file a tax return?
You can’t get an ACTC refund without Form 1040 and Schedule 8812.
When will you get an ACTC refund?
The IRS typically issues refunds for returns that contain the ACTC in mid-February, after fraud checks.
