Can I claim the Child Tax Credit if I’m unemployed and received benefits?

 

Unemployment can trigger a lot of questions where taxes are concerned, especially if you have children. The good news is that you can still claim the Child Tax Credit if you’re unemployed and have received benefits.

Mom considering unemployment tax benefits and child tax credit as she reads from a laptop.

However, the details of your unemployment situation may affect your eligibility for the Child Tax Credit and Additional Child Tax Credit. It may also affect how much the credit will be worth for you.

For example, if you have very little taxable or earned income, the value of these credits may be reduced. Let’s review the income rules related to both the Child Tax Credit and the Additional Tax Credit.

Have other tax-related unemployment questions?  Be sure to visit our Unemployment Resource Center.

Unemployment and tax credit rules

Child Tax Credit – Receiving unemployment income won’t prevent you from claiming the Child Tax Credit. However, because this credit reduces the tax you owe, you must have some taxable income to claim it. The Child Tax Credit is worth up to $2,000 per qualifying child, with a refundable portion of up to $1,400.

If your tax liability (what you owe in taxes for this year) is below $2,000, then you will not be able to use the full amount of the credit. This may be the case for you if unemployment benefits were your only source of income, or if your income has been greatly reduced this year.

Additional Tax Credit – You must have earned income of more than $2,500 to qualify for the Additional Child Tax Credit. If unemployment was your only income, you aren’t eligible to claim the Additional Child Tax Credit.

Good news for your 2020 tax filing: A special “lookback” rule in the Dec. 2020 stimulus bill lets you continue to claim this valuable credit–even if your income changed in 2020.

There are other conditions that must be met to qualify for these credits. You can review those details in our Child Tax Credit and Additional Child Tax Credit post.

Unemployment affects other tax benefits

There are other tax credits that may be affected by unemployment. You must have earned income in the year to claim either of these credits: the Earned Income Credit (EIC) and the Child and Dependent Care Credit.

Help with the Child Tax Credit and unemployment income

Whether you choose to use one of our online programs or to work with a tax pro, H&R Block is here to help you claim the Child Tax Credit and Additional Child Tax Credit.

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