Taxpayer asks:

If I’m a single stay at home mom with 2 kids but no income Am I eligible for a child credit refund?

Taxgirl says:
Unfortunately, no. If you don’t have any income, you won’t benefit from most federal income tax credits.
When it comes to the Child Tax Credit, you can’t claim the credit if you don’t have income. This is because the credit is nonrefundable which means that if the available tax credit exceeds your tax liability, your tax bill is simply reduced to zero.

So even if you were able to claim both kids at $1,000 per child (the maximum available child tax credit for the 2015 tax year), if you don’t have any tax liability, you can’t benefit from the credit. The credit does not carry forward to any future years (or back to any past years): it simply disappears.

Some taxpayers who don’t receive the full benefit from the Child Tax Credit may qualify for the Additional Child Tax Credit.

The Additional Child Tax Credit is refundable which means you can receive a refund even if you do not owe any tax. However, to qualify, you must have at least $3,000 of earned income or have at least three qualifying dependents (additional criteria applies).

Other child-related credits include the Earned Income Tax Credit (EITC) and the Child and Dependent Care Credit. Like the Additional Child Tax Credit, the EITC is refundable which means that you can receive a refund even if you do not owe any tax. However, in order to qualify for the EITC, you must have income from working or running a business. Similarly, the Child and Dependent Care Credit is only available to those parents who work (or are looking for work) and who have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment.

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.

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1 Comment

  1. Yes, in fact, the worksheet to calculate the credit is called the Earned Income Worksheet. The history of the child tax credit, like the EITC, was that it was targeted to low to middle class working families. The ACTC uses the term “earnings” when discussing the refundable piece.

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