Understanding Form 1040 (SP) Schedule 8812: Additional Child Tax Credit (2020)

What Form 1040 (SP) Schedule 8812 Is For

Schedule 8812 (Anexo 8812 in Spanish) is designed to help qualifying families receive the Additional Child Tax Credit (ACTC), a refundable tax credit that can put money back in your pocket even if you don't owe any federal income tax. This form works as a companion to the regular Child Tax Credit, but unlike the standard credit that only reduces your tax bill, the ACTC can generate an actual refund check.

The form calculates whether you're eligible for this additional credit after you've claimed the regular Child Tax Credit on your main tax return. For tax year 2020, the maximum Child Tax Credit was $2,000 per qualifying child, and the Additional Child Tax Credit could refund up to $1,400 of that amount if your regular credit exceeded your tax liability. In simple terms, if the tax you owe is less than your Child Tax Credit, Schedule 8812 helps you claim the unused portion as a refund—assuming you meet the earned income requirements.

The Additional Child Tax Credit specifically targets working families with earned income of at least $2,500 annually. This ensures that families who work but have limited tax liability can still benefit from the full value of the child-related tax benefits Congress created to support parents and guardians raising children.

When You’d Use Form 1040 (SP) Schedule 8812 (Including Late or Amended Returns)

You'll use Schedule 8812 when you complete your Form 1040 (SP), 1040-SR (SP), or 1040-NR and discover that your Child Tax Credit exceeds your actual tax liability. The trigger point comes after you complete the Child Tax Credit and Credit for Other Dependents Worksheet that accompanies your tax return instructions. If that worksheet indicates you might qualify for additional credit, you'll need to complete Schedule 8812 to determine the exact refundable amount.

For late or amended returns, the timing rules are strict. Each qualifying child must have a Social Security Number (SSN) that was valid for employment and issued before the due date of your 2020 return, including any extensions. If you file an original return late or an amended return after discovering you qualified for the credit, the SSN requirement still applies to the original deadline. Similarly, you and your spouse (if filing jointly) must have either an SSN or Individual Taxpayer Identification Number (ITIN) issued on or before that original due date. If you applied for an ITIN on or before the deadline and the IRS subsequently issued it, they'll consider it as meeting the deadline requirement.

If your Child Tax Credit, Credit for Other Dependents, or Additional Child Tax Credit was previously denied or reduced for any year after 2015 (for reasons other than a simple math error), you must also file Form 8862 (or 8862-SP) along with Schedule 8812 when claiming the credit again. This requirement ensures proper documentation and prevents repeated improper claims. There are some exceptions to this requirement, so review Form 8862's instructions or consult the IRS if you're unsure whether it applies to your situation.

One important timing note: for 2020 returns claiming the ACTC, the IRS could not issue refunds before mid-February 2021. This delay applied to your entire refund, not just the portion related to the Additional Child Tax Credit, and was designed to give the IRS time to verify claims and prevent fraud.

Key Rules and Eligibility Requirements for Tax Year 2020

Qualifying Children Requirements

To claim the Additional Child Tax Credit, each child must first meet all the requirements for the regular Child Tax Credit. The child must be under age 17 at the end of 2020, be your son, daughter, stepchild, foster child, brother, sister, half-sibling, or descendant of any of these (like a grandchild or niece). The child must have lived with you for more than half the year, not provided more than half their own financial support, and be a U.S. citizen, national, or resident alien. Most critically, the child must have a valid-for-employment Social Security Number issued before your return's due date.

Earned Income Threshold

You must have earned income of at least $2,500 to qualify for the Additional Child Tax Credit. Earned income includes wages, salaries, tips, other employee compensation, and net earnings from self-employment. It can also include nontaxable combat pay if you choose to include it. The 2020 tax law included a special provision allowing you to use your 2019 earned income instead of 2020 income if the prior year amount was higher—helpful for families whose income dropped during the pandemic.

Income Phase-Out Limits

While the Additional Child Tax Credit itself doesn't phase out for lower-income families (that's its purpose), the overall Child Tax Credit begins reducing when modified adjusted gross income exceeds $200,000 for single filers or $400,000 for married couples filing jointly. Since the Additional Child Tax Credit is calculated from the remaining unused regular credit, these thresholds indirectly affect your ACTC amount.

Calculation Formula

For most families, the Additional Child Tax Credit equals 15% of earned income above $2,500, up to the maximum refundable amount per child ($1,400 in 2020). Families with three or more qualifying children may use an alternative calculation method based on their Social Security and Medicare taxes paid, if that produces a higher credit.

Disqualifying Factors

You cannot claim the Additional Child Tax Credit if you file Form 2555 (Foreign Earned Income Exclusion). Additionally, if you previously claimed the credit improperly and it was denied due to reckless or intentional disregard of the rules, you face a ban from claiming these credits: two years for reckless errors, or ten years for fraudulent claims.

Step-by-Step (High Level)

Overview of the Process

Step 1: Complete Your Main Tax Return First
Start by filling out your Form 1040 (SP) through at least line 19, where you'll initially calculate your regular Child Tax Credit using the Child Tax Credit and Credit for Other Dependents Worksheet. Don't file anything yet—you need to know whether Schedule 8812 applies to you.

Step 2: Determine If You Need Schedule 8812
Look at your completed Child Tax Credit worksheet. If your tentative Child Tax Credit exceeds your tax liability (meaning some credit goes unused), and you have at least one qualifying child under 17 with a valid SSN, you should complete Schedule 8812. The worksheet will specifically tell you to use Schedule 8812 if you meet the conditions.

Step 3: Calculate Your Earned Income
Use the Earned Income Chart in the instructions (or the Earned Income Worksheet in IRS Publication 972-SP for more complex situations) to determine your exact earned income amount. This includes wages from Form W-2, self-employment income from Schedules C or F, and potentially nontaxable combat pay. Remember, you can elect to use 2019 earned income if it's higher than 2020—just write "PYEI" and the 2019 amount on the dotted line next to Form 1040 (SP) line 28.

Step 4: Complete Part I of Schedule 8812
Enter your unused credit amount from the worksheet, subtract your tax liability, and determine the credit per child amount. Multiply the number of qualifying children by $1,400, then calculate 15% of your earned income over $2,500. The Additional Child Tax Credit will be the lesser of these two amounts unless you qualify for the alternative calculation.

Step 5: Complete Part II If Applicable
If you have three or more qualifying children, complete Part II to see if the alternative calculation based on your Social Security and Medicare taxes produces a higher credit. This section requires information from your W-2 forms (boxes 4 and 6) and various other schedules. The IRS will ultimately give you the higher of the two calculation methods.

Step 6: Transfer Your Credit Amount
Once you've completed Schedule 8812 and determined your Additional Child Tax Credit amount (line 15), enter this amount on Form 1040 (SP) line 28. This credit will be added to any other refund you're receiving or will reduce any balance due. Then finish the rest of your tax return and file everything together—your main return plus Schedule 8812 attached.

Common Mistakes and How to Avoid Them

Missing or Invalid Social Security Numbers

The most frequent error involves SSN issues. Every child you claim for the Additional Child Tax Credit must have a Social Security Number that's valid for employment—not just any SSN. If the card says "Not Valid for Employment," you cannot use that child for the ACTC until you get a replacement card. Some parents confuse ITINs (Individual Taxpayer Identification Numbers) with valid SSNs; only SSNs work for the Additional Child Tax Credit. Double-check every number you enter, verify it matches the Social Security card exactly, and ensure the card doesn't have employment restrictions.

Forgetting the $2,500 Earned Income Minimum

Many families assume they qualify for the refundable credit simply because they have children and paid little tax, but the $2,500 earned income threshold is absolute. If your only income came from investments, unemployment, or Social Security benefits, that income doesn't count. To avoid disappointment, calculate your earned income (wages, salary, self-employment income) before spending time on Schedule 8812. If you're close to the $2,500 threshold, make absolutely sure you're not overlooking any earned income sources, including small self-employment income reported on Schedule C.

Math Errors in the Earned Income Calculation

The earned income definition is more complex than it seems. You must start with wages, add certain self-employment income, include nontaxable combat pay if you choose, but then subtract specific amounts like Medicaid waiver payments or pension distributions from deferred compensation plans. Many filers miss these adjustments. Use the detailed Earned Income Chart in the instructions or Publication 972-SP rather than guessing. If you have self-employment income, military pay, clergy income, or any unusual income sources, take extra time with this calculation.

Using the Same Child for Multiple Credits Incorrectly

You cannot "double dip" by using the same child for both the Additional Child Tax Credit and the Credit for Other Dependents. If your child doesn't have a valid-for-employment SSN, they can only qualify for the Credit for Other Dependents (if they have any TIN), not for any child tax credits. Similarly, if your 17-year-old's birthday was in December 2020, they might qualify for the Credit for Other Dependents but not the Child Tax Credit or Additional Child Tax Credit. Read the age and identification requirements carefully for each credit.

Claiming the Credit When Filing Form 2555

This is an automatic disqualifier that many overseas taxpayers miss. If you're claiming the Foreign Earned Income Exclusion on Form 2555, you are categorically ineligible for the Additional Child Tax Credit, regardless of how many qualifying children you have or how much earned income you received. The instructions state this clearly, but taxpayers sometimes overlook it, leading to rejected returns or later audit issues.

Alternative Calculation Confusion for Large Families

Families with three or more qualifying children often skip Part II of Schedule 8812 because it looks complicated, but this section might give you a larger credit. The alternative calculation based on Social Security and Medicare taxes paid can produce a higher refund than the standard 15% calculation, especially for families with higher earned income who paid substantial payroll taxes. Don't leave money on the table—complete both calculations and take the higher amount.

What Happens After You File

Refund Processing Timeline

After you file your return with Schedule 8812 attached, the IRS processes your claim along with the rest of your tax return. For 2020 returns claiming the ACTC, refunds couldn't be issued until mid-February 2021 at the earliest—even if you filed in January. This holding period was mandated by federal law to allow the IRS time to verify eligibility and combat fraud. Once this period passed, most straightforward returns with accurate information were processed within the standard timeframe of 21 days for e-filed returns or six weeks for paper returns.

Potential IRS Verification

The IRS may select your return for additional verification, especially if you're claiming the Additional Child Tax Credit for the first time or if there are inconsistencies in your information. You might receive Letter 4464C asking you to verify your identity, or Letter 12C requesting documentation that your children meet the qualifying child requirements. Respond promptly with the requested documents—typically school records, medical records, or other proof showing the child lived with you for more than half the year and meets age requirements.

How You Receive the Refund

If you set up direct deposit when filing, your Additional Child Tax Credit refund will be deposited directly into your bank account along with any other refund amounts from your return. Otherwise, the IRS will mail a paper check to the address on your return. You can track your refund status using the ""Where's My Refund?"" tool on IRS.gov or by calling the automated refund hotline at 800-829-1954, but remember you'll need your exact refund amount, filing status, and Social Security Number.

Welfare Benefits Protection

Here's important good news—your Additional Child Tax Credit refund is protected from being counted as income when determining eligibility for most federal assistance programs. This includes Temporary Assistance for Needy Families (TANF), Medicaid, Supplemental Security Income (SSI), and SNAP (food stamps). Additionally, the refund cannot be counted as a resource for at least 12 months after you receive it. This protection ensures that getting your tax refund won't jeopardize your family's benefits, though you should still notify your local benefits coordinator about the refund just to be safe.

If Your Claim Is Denied

Should the IRS deny or reduce your Additional Child Tax Credit, you'll receive a notice explaining why. Common reasons include invalid Social Security Numbers, failure to meet the earned income threshold, or mathematical errors. If you believe the denial was incorrect, you have the right to appeal by following the instructions in the notice. However, if your claim is denied for any reason other than a math or clerical error, you'll need to file Form 8862 or 8862 (SP) with any future return where you claim the credit again. Keep careful records to support your position if you need to contest an IRS determination.

FAQs

My child turned 17 in December 2020. Can I still claim the Additional Child Tax Credit for them?

Unfortunately, no. The law requires that your child must be under age 17 at the end of the tax year, which means December 31, 2020. If your child's 17th birthday was on December 31 or earlier, they don't qualify for any amount of the Child Tax Credit or Additional Child Tax Credit. However, if they meet other dependency requirements, you may be able to claim them for the Credit for Other Dependents, which provides up to $500 but is not refundable like the ACTC.

I lost my job in 2020 and my earned income dropped. Can I use my 2019 income instead?

Yes, the 2020 tax law specifically allows this. If your 2019 earned income was greater than your 2020 earned income, you can elect to use the 2019 amount to calculate your Additional Child Tax Credit. This provision was designed to help families affected by pandemic-related job losses. To make this election, you must write "PYEI" (Prior Year Earned Income) and the amount of your 2019 earned income in the space next to line 28 of your Form 1040 (SP). Calculate your earned income for both years using the Earned Income Chart to determine which year produces the higher credit.

Do I need to attach any documents proving my children lived with me when I file Schedule 8812?

No, you don't need to attach documentation when you initially file your return. However, you should keep records such as school enrollment forms, medical records, childcare provider statements, or landlord letters that show your children lived at your address for more than half of 2020. The IRS may request these documents if they select your return for verification. Having organized records ready will help you respond quickly if the IRS sends a verification letter, avoiding delays in receiving your refund.

What if my child has an ITIN but not a Social Security Number?

A child with only an Individual Taxpayer Identification Number (ITIN) cannot be used to claim the Child Tax Credit or Additional Child Tax Credit—they must have a valid-for-employment Social Security Number. However, if your child has an ITIN and meets other requirements, you can claim up to $500 for them under the Credit for Other Dependents. That credit is nonrefundable, meaning it can only reduce your tax liability to zero but cannot generate a refund. If your child is a U.S. citizen or eligible to work in the U.S., consider applying for a Social Security Number so you can claim the more valuable child tax credits in future years.

I have four qualifying children. Should I use Part I or Part II of Schedule 8812?

You should complete both parts and take the higher amount. Part I calculates your Additional Child Tax Credit using the standard formula (15% of earned income over $2,500, limited to $1,400 per child). Part II provides an alternative calculation for families with three or more qualifying children, based on the Social Security and Medicare taxes you paid during the year. This alternative method can result in a higher credit if you had significant earned income and paid substantial payroll taxes. The IRS allows you to claim whichever calculation benefits you more, so it's worth the extra few minutes to complete both sections.

Can I claim the Additional Child Tax Credit if my spouse and I file separately?

The credit is available to all filing statuses, including married filing separately, but your calculation method depends on your situation. The income thresholds for phase-out differ by filing status—married couples filing separately begin losing credit at $200,000 of modified adjusted gross income rather than the $400,000 threshold for joint filers. Additionally, you and your spouse cannot both claim the same child. Only one parent can claim the child as a dependent and receive the corresponding tax credits. Generally, this is the parent with whom the child lived for the greater part of the year. If you're separated or divorced, special rules may apply regarding which parent can claim the child.

The IRS denied my Additional Child Tax Credit last year. What do I need to do to claim it for 2020?

If your CTC, ODC, or ACTC was denied or reduced for any year after 2015 for any reason other than a mathematical error, you must complete and attach Form 8862 (or 8862-SP in Spanish) to your 2020 tax return when claiming the credit again. This form requires you to provide detailed information about the qualifying children you're claiming and confirm they meet all requirements. There are limited exceptions to this rule—for example, if the only reason for denial was that your child didn't have the required SSN but now has one, you may not need Form 8862. Review the instructions carefully or consult the IRS to determine if an exception applies to your situation. Failing to file Form 8862 when required will result in automatic denial of your 2020 claim.

Sources

Sources: All information in this summary comes from official IRS.gov documents:

• 2020 Schedule 8812 (Form 1040) Instructions (Spanish version)
• 2020 Schedule 8812 Form (Spanish version)
• 2020 Instructions for Schedule 8812 (English version)
• IRS Publication 972 (2020): Child Tax Credit and Credit for Other Dependents

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