There is no reason to delay filing your federal tax return, especially if you expect to receive a refund from the Internal Revenue Service. However, parents who claim the child tax credit may wonder whether their refund could be delayed because of how the IRS processes certain credits. With Tax Day just around the corner, it is important to understand the rules that apply to the child tax credit, the additional child tax credit, and the timing of refund payments.

The child tax credit is a federal tax benefit designed to help families offset the cost of raising children. Under current law, you can reduce your federal income tax bill by up to $2,000 for each qualifying dependent child who was younger than 17 at the end of the 2024 tax year. This credit is available to eligible taxpayers who meet income requirements and whose child meets relationship, residency, and support tests. The credit can be claimed in addition to other tax benefits, and it can significantly lower the amount of tax you owe.

One of the most common questions taxpayers ask is whether the child tax credit results in a refund. The answer is not always straightforward. The standard child tax credit is nonrefundable, meaning that it can reduce your taxable income to zero, but it cannot generate a refund that exceeds the amount of tax you owe. If the credit is worth more than your tax liability, you do not automatically lose the difference. In many cases, you may be eligible for the additional child tax credit, which is the refundable portion of the child tax credit. For the 2024 tax year, the additional child tax credit allows eligible families to receive up to $1,700 per child as a refund, even if they owe no federal income tax.

The distinction between a nonrefundable and a refundable credit is critical. A nonrefundable credit can only reduce your tax bill to zero. A refundable credit, on the other hand, can produce a refund check after your tax liability is eliminated. The additional child tax credit is the refundable piece of the child tax credit, and it exists to ensure that lower-income families can benefit from the credit even if they do not earn enough to owe federal income tax.

Because the additional child tax credit involves refund payments, the IRS applies extra scrutiny to prevent fraud and improper payments. This means that if you claim the additional child tax credit on your tax return, the IRS will not release your refund before mid-February. This statutory requirement has been in place for years and applies to returns that claim either the additional child tax credit or the earned income tax credit. The IRS uses this time to verify information and match returns against government databases.

For most taxpayers who file electronically and choose direct deposit, the delay is minimal. The IRS has stated that taxpayers who claim the earned income tax credit or the additional child tax credit should receive their refund by March 3, 2025, provided they file online and select direct deposit. This date is not a guarantee for every return, but it is the target date used by the IRS for the vast majority of refunds involving these credits. If you have already filed and claimed the additional child tax credit, you are likely past the point where the mid-February hold will affect you. Even if you have not yet filed, filing now means you will receive your refund after the hold has already been lifted, so you should not experience a significant delay.

It is important to note that the refund delay applies only to the additional child tax credit, not to the standard child tax credit. If you claimed the standard, nonrefundable child tax credit to reduce your tax liability, you are not owed extra money from the IRS because of the credit. Therefore, the anti-fraud rules that require the IRS to hold refunds until mid-February do not apply to your situation. Your refund, if any, would be processed according to the normal IRS timeline, which typically delivers refunds within 21 days for electronically filed returns with direct deposit.

How much money could I get from the child tax credit?

Under the current federal-level credit, you can receive up to $2,000 per dependent child under age 17 from the child tax credit. The child tax credit is nonrefundable, meaning you cannot receive that $2,000 if it is more than the taxes that you owe. However, if you claim the child tax credit and have no tax liability, you can get $1,700 per child back in a separate tax break known as the additional child tax credit. If that happens, you will run into a slight potential delay.

• Up to $2,000 per child under age 17 for the nonrefundable credit.
• Up to $1,700 per child as a refundable additional child tax credit.
• Refunds involving the additional child tax credit are held until mid-February.
• E-filers with direct deposit should receive refunds by March 3, 2025.
• The current $2,000 credit expires after 2025 without congressional action.

The credit’s current value was set as a temporary expansion by the Tax Cuts and Jobs Act of 2017 and will last through the end of 2025. If Congress does not pass another expansion by then, it will revert from the current $2,000 to the value set by permanent law: $1,000 per dependent child.

When will I get my refund if I claim the additional child tax credit?

If you are claiming the additional child tax credit, the IRS is required by law to not release the money for your tax refund

Source: CNET News