There is no good reason to put off filing your taxes this year, especially if you expect the IRS to send you a refund. For parents who plan to claim the child tax credit, however, there are a few situations where the money may take a little longer to reach your bank account. With Tax Day just around the corner, you might wonder if you need to be worried about a delay.
The child tax credit is one of the most valuable tax breaks available to families. It allows eligible parents to lower the amount of tax they owe in a given year, depending on how many dependent children they can claim. The credit is designed to help offset the cost of raising a family. The rules can be complicated, especially when the credit becomes refundable, so it is important to understand how it works and when the IRS releases refunds.
How much money can you get from the child tax credit?
Under current rules, you can claim up to $2,000 per qualifying dependent child under the age of 17 at the end of the tax year. That credit is applied directly against your federal income tax bill. If you owe $3,000 in federal taxes and you have two eligible children, the child tax credit can reduce that bill by $2,000, leaving you with only $1,000 owed.
But the $2,000 maximum is generally nonrefundable. That means the credit can reduce the amount you owe to zero, but you cannot get back any portion of the credit that exceeds your tax liability. If your tax liability is only $800, you cannot receive the full $2,000 as a refund. The unused portion is generally lost unless you qualify for the additional child tax credit.
What is the additional child tax credit?
The additional child tax credit, sometimes called the refundable portion of the child tax credit, is the part that can give you money back even if you have no tax liability. Under current law, if you claim the child tax credit and do not owe income tax, you may be able to receive up to $1,700 per child as a refundable credit.
This is a huge boon for low- and middle-income families. For example, a family with one child and no federal tax liability could receive a refund of up to $1,700, even though they paid no income tax. If they have two children, the potential refund could double, depending on their earned income and other factors. The IRS calculates the additional child tax credit using a formula based on your earned income, so the amount can vary.
The $2,000 child tax credit, as well as the $1,700 refundable threshold, are not permanent. They were set as part of the Tax Cuts and Jobs Act of 2017. That law temporarily doubled the credit from its permanent level of $1,000 per child and made more of it refundable. Unless Congress votes to extend these provisions, the credit will revert to $1,000 per child after the 2025 tax year. That means for the 2025 tax year you file in 2026, the current rules still apply, but future years are uncertain.
Qualifications for the child tax credit
To claim the child tax credit, you must meet several basic requirements. The child must be under 17 at the end of the tax year. The child must be your son, daughter, stepchild, foster child, sibling, stepsibling, or a descendant of any of these. The child must have lived with you for more than half the year. The child must not provide more than half of their own financial support. You must be able to claim the child as a dependent on your tax return. The child must also have a valid Social Security number and be a U.S. citizen, national, or resident alien.
There are also income limits. The child tax credit begins to phase out when your modified adjusted gross income exceeds $200,000, or $400,000 if you are married filing jointly. The credit is reduced by $50 for every $1,000, or fraction of $1,000, of income above that threshold. So families with very high incomes may not qualify for the full credit, or may not qualify at all.
Will claiming the child tax credit delay your refund?
In most cases, no. If your tax refund is generated solely by the nonrefundable child tax credit, meaning the credit simply lowers the amount of tax you owe, you will not see any delay. The IRS processes those returns like any other direct deposit refund. The delay only affects taxpayers who claim the additional child tax credit, the refundable version.
Federal law requires the IRS to hold refunds that include the additional child tax credit or the earned income tax credit until at least mid-February. This requirement was introduced by the Protecting Americans from Tax Hikes Act of 2015, sometimes referred to as the PATH Act. The purpose is to give the IRS more time to verify that the credits are valid and to reduce the risk of fraudulent returns. The hold is an anti-fraud measure, not a sign that something is wrong with your return.
For the 2025 filing season, the IRS has announced that if you file electronically and choose direct deposit, and you claim the earned income tax credit or the additional child tax credit, you should receive your refund by March 3, 2025. This is true even though the tax filing deadline is April 15, 2025. The IRS says that most refunds are issued within 21 days of filing, but the additional child tax credit refunds are subject to the mid-February hold.
When should you expect your refund if you already filed?
If you already filed your return and claimed the additional child tax credit, your refund likely has already been released. The IRS began accepting tax returns in late January, and the mandatory hold ended in mid-February. If you provided direct deposit information, your refund may have arrived by March 3. If you requested a paper check, your refund could take longer, depending on postal delivery times.
If you have not filed yet, you should not expect a meaningful delay. The mid-February hold is only relevant for returns that are processed before mid-February. If you file in late March or early April, the IRS can process your refund normally, and you should receive it within the usual 21-day window if you file electronically and choose direct deposit. That said, paper returns can take several weeks longer, and filing errors can also slow down processing.
How to track your child tax credit refund
If you are waiting for a refund that includes the child tax credit, you can track its status using the IRS's Where's My Refund? tool. The tool is available on the IRS website and through the IRS2Go mobile app. You will need to enter your Social Security number, your filing status, and the exact amount of the refund you expected on your return. The tool is updated once a day, usually overnight, so you do not need to check multiple times in a single day.
Your refund will show one of three statuses: received, approved, or sent. A status of received means your return has arrived and is being processed. Approved means the IRS has verified your information and the refund amount has been finalized. Sent means the IRS has transmitted the refund to your bank or to a paper check in the mail. The Where's My Refund? tool is the most reliable way to know when your money will arrive.
What about state child tax credits?
In addition to the federal child tax credit, many states have created their own child tax credits. Some states offer refundable credits, which can also lead to refunds, while others only offer credits that reduce your state tax bill. These state credits are separate from the federal credit and do not affect the timing of your federal refund. If you live in a state with its own child tax credit, you should research the eligibility rules and claim it on your state return.
Practical steps to avoid refund delays
Whatever type of child tax credit you claim, you can take several steps to keep your refund moving quickly. First, file electronically. The IRS processes e-filed returns faster and with fewer errors than paper returns. Second, choose direct deposit. A refund sent electronically avoids the possibility of lost, stolen, or undeliverable checks. Third, double-check the Social Security numbers for your children and your own personal information before you submit. A typo in a child's Social Security number is one of the most common reasons a return gets flagged for review.
Another reason a refund might be delayed is if the IRS suspects identity theft or fraud. To reduce the risk, it is wise to use a secure internet connection when filing, avoid using public Wi-Fi, and never share your tax information with someone you do not trust. If you use tax software, choose a reputable product that offers identity protection. A tax professional can also help if your return is complex, but you do not need one just to claim the child tax credit.
The future of the child tax credit
The child tax credit has changed dramatically over the years, and it may change again. Congress expanded the credit temporarily during the COVID-19 pandemic in 2021, sending monthly advance payments to most families and increasing the maximum credit to $3,600 for children under 6 and $3,000 for older children. That expansion expired after one year. The current $2,000 credit is also scheduled to expire after 2025, so lawmakers will have to decide whether to extend it. Several proposals have been introduced to make the credit permanently more generous, but none have passed.
For now, the good news is that the child tax credit remains available, and you do not need to worry about your refund being significantly delayed just because you are a parent claiming this credit. The IRS has reviewed the returns that include the additional child tax credit and has already released those refunds. If you are just now preparing your return, file as you normally would and choose direct deposit. The credit could put thousands of dollars back in your pocket, and any delay will be minimal.
Source:CNET News