Is the Child Tax Credit refundable?

The Child Tax Credit, as it stands, has both non-refundable and refundable elements based on qualifying circumstances. The credit can reduce a taxpayer's liability down to zero, which means it does provide some flexibility in its use.

However, the credit has undergone changes that allow certain taxpayers to access a refundable portion, particularly for lower-income families. Specifically, the American Rescue Plan that temporarily expanded the credit allows it to be fully refundable for tax years 2021. In this circumstance, families meeting the income eligibility requirements can receive a refund for the amount of the credit that exceeds their tax liability.

Thus, stating that the Child Tax Credit is not refundable oversimplifies the situation. The credit is designed to assist taxpayers with children, and its potential to be refundable exists, especially for certain qualifying individuals. This would indicate that while many may think of it as a non-refundable credit, there are key provisions under which it can be refundable.