1040 Child Tax Credit and Schedule 8812

Introduction

If you are a US citizen or green card holder living in Australia, you still file a US federal return. That return may include the Child Tax Credit (CTC), and Schedule 8812 is where it gets calculated.

Many filers struggle with the same points: which children qualify, why part of the credit is refundable, and how foreign income changes the picture. A single wrong Social Security number (SSN) or a 17th birthday can change the result.

Form 1040 and Schedule 8812 are US federal tax forms. This guide does not describe an Australian tax credit.

It covers eligibility, how the forms connect, the Additional Child Tax Credit (ACTC) calculation, filing steps and common errors. All figures are for tax year 2025.

Key Takeaways

  • The CTC is nonrefundable; the ACTC is the refundable portion, calculated on Schedule 8812.
  • Eligibility turns on age, relationship, residency, support, SSNs and income.
  • For 2025, Schedule 8812 feeds Form 1040 line 19 (CTC) and line 28 (ACTC).
  • Filing Form 2555 bars the ACTC, so check this first.
  • Always use the current-year IRS instructions, not last year's figures.

What Are the Child Tax Credit, ACTC, and Schedule 8812?

The three credits

The Child Tax Credit (CTC) is a nonrefundable credit of up to $2,200 per qualifying child for 2025. It can reduce your federal income tax to zero but cannot create a refund by itself.

The Additional Child Tax Credit (ACTC) is the refundable part, capped at $1,700 per qualifying child for 2025. It applies when you cannot use all of the CTC against the tax you owe. It is not a second credit stacked on top of the CTC.

The Credit for Other Dependents (ODC) is $500 per eligible dependent who does not qualify for the CTC. Examples include a child aged 17 or older, or a dependent who lacks the required SSN but holds another taxpayer identification number. The ODC is nonrefundable.

What Schedule 8812 does

Schedule 8812 pulls together your dependent details, income, tax liability and refundable-credit calculations. It is attached to Form 1040, 1040-SR or 1040-NR. The results then flow back to the main return.

For 2025 filings, the IRS instructions for Schedule 8812 and the IRS Child Tax Credit page are the primary references. The IRS has published a 2026 Schedule 8812, but its instructions are still marked draft, so do not use them for filing.

Who Qualifies for the Child Tax Credit and ACTC?

The qualifying-child tests

The child must be your dependent and meet these conditions:

  • Under age 17 at the end of the tax year
  • Related to you, or placed with you (for example, a foster child)
  • Lived with you for more than half the year
  • Did not provide more than half of their own support
  • A US citizen, national or resident alien
  • Not filing a joint return, other than to claim a refund

Living in Australia does not exclude a child. The residency test asks whether the child lived with you, not whether the home was in the US. IRS Publication 501 sets out the full tests.

SSN rules

The child generally needs a valid SSN issued before the return due date, including extensions. From 2025, the taxpayer also needs an SSN valid for employment. On a joint return, one spouse needs the SSN; the other needs an SSN or ITIN issued by the due date.

A child with only an ITIN cannot receive the CTC or ACTC, but may qualify for the $500 ODC.

Income phase-out

For 2025, the credit reduces by $50 for every $1,000 (or part) of modified adjusted gross income (MAGI) above:

  • $400,000 for married filing jointly
  • $200,000 for all other filing statuses

Cross-border points for Australia-based filers

  • Schedule 8812 adjusts MAGI by adding back certain Form 2555 foreign earned income and housing amounts. Excluded foreign income does not automatically lower your phase-out income.
  • Schedule 8812 instructions bar the ACTC for anyone filing Form 2555. Check this before choosing the exclusion.

Special situations

  • Divorced or separated parents: the custodial parent can release the claim using Form 8332.
  • Competing claims: tiebreaker rules apply. The parent the child lived with longer generally wins; with equal time, the higher-AGI parent prevails.
  • Only one taxpayer can claim a given child.

Common disqualifiers

  • The child turned 17 during the year
  • A missing or invalid SSN
  • Failing the residency, dependency or support tests
  • Another taxpayer claiming the child
  • Filing Form 2555 (for the ACTC)

Income above the threshold reduces the credit gradually. It is not an all-or-nothing cutoff.

2025 Child Tax Credit income phase-out thresholds and reduction

How to Complete Schedule 8812

Gather your information first

  • Completed Form 1040 income and tax figures
  • Filing status
  • Names, dates of birth and SSNs or ITINs for each dependent
  • Earned-income records
  • Any Form 2555 or Form 4563 details

Part I: the CTC and ODC

Work through Part I in this order:

  • Count children under 17 who have the required SSN, then multiply by the 2025 maximum
  • Count other dependents separately and multiply by $500
  • Apply the MAGI reduction, then the Credit Limit Worksheet (it caps the credit at your tax liability)
  • Use Credit Limit Worksheet B when the form instructions require it

The allowed amount goes to Form 1040 line 19.

Part II: the ACTC

Part II turns any unused CTC into the refundable Additional Child Tax Credit. The standard formula is 15% of earned income above $2,500, limited by the $1,700 per-child cap and the unused credit.

Filers with three or more qualifying children may use Part II-B instead, which compares Social Security and Medicare tax amounts. Follow the IRS worksheet conditions for that path.

Enter the final ACTC on Form 1040 line 28. Attach Schedule 8812 on a paper return, or include it in the electronic return if you e-file.

Do not copy line numbers or formulas from a prior-year schedule. The form and the law change.

Schedule 8812 CTC and ACTC reporting flow to Form 1040

How the ACTC Is Calculated and Reported

The calculation sequence

  1. Identify your qualifying children.
  2. Work out the total CTC available.
  3. Reduce it for the MAGI phase-out.
  4. Subtract your allowable tax liability to find the unused amount.
  5. Test that unused amount against the earned-income formula and per-child cap.

Earned income generally includes wages, salaries, tips and net self-employment earnings. The worksheet has specific adjustments, such as for nontaxable combat pay. Do not substitute gross income, or income excluded on Form 2555.

Worked example (illustrative only)

These are fictional figures using 2025 amounts. They are not tax advice.

  • Two qualifying children under 17; single filer, MAGI below $200,000
  • Total CTC available: 2 × $2,200 = $4,400
  • Tax liability that the credit can offset: $1,000
  • Nonrefundable CTC used: $1,000; unused CTC: $3,400
  • Earned income $30,000: 15% × ($30,000 − $2,500) = $4,125
  • Per-child cap: 2 × $1,700 = $3,400
  • ACTC is the smallest of the three: unused CTC ($3,400), earned-income result ($4,125) and cap ($3,400), so $3,400

The $1,000 goes to line 19 and the $3,400 to line 28. Each dollar is counted once.

Illustrative 2025 ACTC calculation showing three limiting amounts

Refund timing

By law, the IRS cannot issue refunds for returns claiming the ACTC before mid-February. The hold covers the whole refund, not just the ACTC portion. Actual dates depend on processing, so check the IRS refund guidance for your filing season.

Filing Checklist, Common Mistakes, and When to Get Help

Pre-filing checklist

  • Names and dates of birth match SSN records
  • SSNs or ITINs are correct and issued by the due date
  • Each child passes the dependency and residency tests
  • Custody arrangements and any Form 8332 are documented
  • Earned-income documents are on hand
  • Foreign-income forms such as Form 2555 are reviewed
  • Current-year Schedule 8812 instructions confirmed
  • Schedule 8812 amounts match Form 1040

Frequent errors

  • Claiming a 17-year-old for the larger CTC
  • Entering an incorrect SSN
  • Claiming a child another taxpayer also claims
  • Treating the ACTC as an extra credit
  • Using the wrong year's thresholds
  • Overlooking Form 2555 consequences

A previously disallowed credit generally requires Form 8862 before you claim it again. The IRS error guidance covers other common mistakes.

Getting help

VJM Global's tax-compliance professionals assist Australia-based taxpayers with US filing obligations. They can review dependent eligibility, cross-border income information and Schedule 8812 reporting. VJM Global is not affiliated with the IRS, and no outcome or savings is guaranteed.

This article is general information, not tax advice. If you have a shared-custody dispute, missing identification numbers, an amended return, nonresident issues or complex foreign income, consult a qualified tax professional and the current IRS guidance.

Frequently Asked Questions

What is the maximum Child Tax Credit you can get?

For 2025, it is $2,200 per qualifying child. Income phase-outs may reduce it, and up to $1,700 per child can be refundable as the ACTC.

What is the maximum you can earn for child tax credits?

There is no single earnings limit. The credit phases out above MAGI of $200,000 (or $400,000 for joint filers). Separately, the ACTC formula uses earned income above $2,500.

How is ACTC calculated?

Take the unused CTC, then compare it with 15% of earned income above $2,500 and the $1,700 per-child cap. The smallest figure applies, subject to SSN and income limits.

Can you qualify for both CTC and ACTC?

Yes. The ACTC is the refundable part of the overall credit, so a return can include both. Each dollar is counted only once.

What disqualifies you from the Child Tax Credit?

Common causes are a child aged 17 or older, a missing SSN, failing the dependency or residency tests, or a duplicate claim. Check the rules for your specific tax year.