How Child Tax Credit is calculated?
For 2019, up to $1,400 of the Child Tax Credit (CTC) is refundable. (Previously, the CTC was entirely non-refundable.) So if your income tax bill when you file in 2019 is zero, you may be able to get a $1,400 refund for every eligible child. This amount is also indexed to inflation, so it will increase slightly each year.
If you earned $6,500.00 in 2019 and wonder why CTC is lower or not $1,400.00 refundable credit.
Here is the calculation:
| Gross Wages | $6,500.00 |
| Income Limit | $2,500.00 |
| Earned Income exceed limit | $4,000.00 |
CTC is the lower amount of (1) $1,400.00 or (2) 15% of $4,000.00 =$600.00
However, the new tax law also caps the refundable portion of the CTC to 15% of your earned income that exceeds $2,500. That means you need to have at least $11,830 of earned income to qualify for the full refund of $1,400.