The US citizens with tax responsibility can file their tax return from 27 Jan 2025, as the IRS will start accepting taxes from this date. The taxpayers should know that the federal government has many credits that allow taxpayers to have tax breaks or the potential to increase their tax refunds.
Additional Child Tax Credit is one such tax credit, which is a refundable part of the Child Tax credit. The taxpayers planning to claim the ACTC with their tax return can learn everything about this refundable credit from here.
IRS Additional Child Tax Credit 2025 Refund
The IRS has tax credits that allow taxpayers to save some money and reduce their tax bills as they meet certain conditions. The Child Tax Credit and ACTC allow individuals with a dependent child who meets the tax credit eligibility to receive the non-refundable credit and refundable credit.
The refundable credit adds more to your tax refund even when you don’t owe any taxes to the agency, hence, the IRS urges citizens to file tax returns even when they have no income to report. The refundable credit is an unused part of the CTC refund that the IRS defines based on inflation.
The IRS releases the inflation adjustment for each year based on inflation, so based on the 2024 tax year inflation adjustment, the ACTC refund is increased to $1700 from the earlier $1600. The IRS has kept the ACTC refund the same as the 2024 tax year for the 2025 tax year, which will be due in 2026.
When can you expect the IRS Additional Child Tax Credit 2025 Refund?
The IRS generally sends the refund early within 21 days if the tax return is e-filed and the taxpayers have selected the direct deposit payment method. The IRS tax refund is processed based on the way you have filed, the refund payment method, and the time the IRS has accepted the tax return.
Taxpayers should know the tax return with ACTC and EITC claims take longer to process due to the PATH Act obligation. Under the PATH Act, the IRS has to wait till 15 Feb of the tax season to process the tax return with ACTC/ EITC claims to prevent any fraudulent activities and give the IRS more time to review the tax return properly.
So, if you file the tax return early this tax season, even then you will receive the tax refund after 15 Feb 2025. According to the IRS, the tax refund with ACTC/ EITC claims will be processed till 27 Feb 2025 via direct deposit and the physical check tax refund will be sent in the first week of March 2025 as it takes time.
Who can apply for the IRS Additional Child Tax Credit 2025?
The taxpayers who plan to claim the ACTC tax credit with their tax return this tax season should check the following eligibility conditions for the child you wish to claim the credit:
- The child must be under the age of 17 in the 2024 tax year;
- The child relations with you can be your son, daughter, brother, stepbrother/ daughter, eligible foster child, brother, sister, half-brother/ sister, stepsister/brother, or he/she can be the descendant of your family;
- The child must be living with you and you are responsible for taking care of you for at least half of the tax year;
- You must the child as a dependent on your tax return and the child should not have to file the joint return for the tax year;
- The child should not provide for him/herself during the tax year;
- The child must be a US national/ citizen/ or US resident alien;
- The child must have a Social Security Number that was issued before the 2024 tax year due date and is valid for employment.
What can affect your IRS Additional Child Tax Credit 2025 Refund?
According to the IRS, the ACTC tax refund can be reduced or affected due to some factors. Taxpayers can check these factors and see what can affect their ACTC tax refund:
- Your adjusted gross income should not go above the value of $200,000 for individuals and $400,000 for married people who filed tax returns jointly, if it goes your ACTC tax refund will begin to reduce.
- You will not receive the ACTC refund if you or your partner (who filed the joint tax return) have filed Form 2555 EZ or Form 2555 with their tax return. Form 2555 mentions foreign-earned income and housing exclusions and deductions for the tax year, whereas Form 2555 EZ allows you to exclude $107,600 from your foreign-earned income or others;
Apart from these, taxpayers should see that they file the tax return with valid tax information to not have any problems when the agency reviews their tax returns and receives the tax refund timely.
How can you apply for the IRS Additional Child Tax Credit 2025 Refund?
Taxpayers who wish to apply for the ACTC with their tax return can claim it with their 1040 tax form along with filing Schedule 8812 form. The taxpayers should include the details of the dependent child and calculate the ACTC in Schedule 8812 form Part II-A.
Taxpayers should check every detail before filing the tax return to ensure the IRS accepts the tax return and processes the tax refund in the applicable payment period. When you file the tax return you must choose the direct deposit as the payment method to ensure you receive the payment directly to your bank account.
The IRS tax season will start in a few days, taxpayers who wish to claim ACTC with the tax return should file it before the due date to receive the tax refund of up to $1700 on time.