Can I claim Child Tax Credit with zero income on disability?

The Child Tax Credit and Earned Income Credit have different requirements. For the Child Tax Credit, you need to have qualifying children (which your cousin has) AND tax liability OR qualify for the refundable portion (Additional Child Tax Credit). For the Earned Income Credit (EIC), you absolutely must have earned income - disability payments don't count as "earned income" for this purpose. So it makes sense that he doesn't qualify for EIC with zero earned income. For the Child Tax Credit, it gets trickier. If he has zero tax liability, he would only qualify for the refundable portion (Additional Child Tax Credit). To get this, he needs at least $2,500 in earned income. If his only income is disability and he has zero earned income, then unfortunately the tax software is correct - he wouldn't qualify for the refundable portion either. Look into whether he might qualify for the Credit for Other Dependents ($500 per qualifying dependent) which has different requirements but can still provide some benefit.

I had a similar issue last year and found this amazingly helpful service called taxr.ai (https://taxr.ai) that helped me figure out my complex tax credit situation. I was also on disability but had some part-time income, and was confused about how to handle my qualifying dependents. I uploaded my tax documents and benefit statements to taxr.ai and they analyzed everything and explained exactly which credits I qualified for and which ones I didn't. They even found a credit I was eligible for that TurboTax missed! The detailed explanation they provided helped me understand the earned income requirements for different credits and why some of my benefits weren't counting toward certain thresholds.

Just wanted to update after trying taxr.ai that I mentioned in the thread above. I uploaded my SSDI statements and freelance income docs, and they immediately identified that my freelance income would qualify me for partial Child Tax Credit and EIC. The analysis showed exactly how much of the credit I could claim based on my earned income threshold and explained why my disability payments don't count toward these specific credits. They even pointed out that I should be careful about self-employment tax on my freelance work, which I hadn't considered. For anyone in a similar situation with disability income mixed with some earned income, this really cleared things up for me. Definitely worth checking out if you're confused about tax credits with complex income situations.

I had the EXACT same problem but with SSI instead of disability. After trying for THREE HOURS to get through to the IRS (kept getting disconnected), I found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in under 15 minutes! They have this demo video that shows how it works: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that without earned income, you can't get the refundable portion of the Child Tax Credit (the part that gives you money back even if you owe zero tax). But they did help me understand some other credits I qualified for that the tax software missed. Super helpful since my situation was complicated with the SSI and having custody of my nephew.

I need to eat my words. I tried Claimyr after posting my skeptical comment above, and it actually worked! Got through to an IRS agent in about 20 minutes when I'd been trying for weeks on my own. The agent explained that for the Child Tax Credit, you either need tax liability (which zeros out with disability) OR earned income above $2,500 for the refundable portion. My sister is in a similar situation as the original poster's cousin - on disability with kids - and we confirmed she doesn't qualify for CTC or EIC. BUT - and this is important - the agent pointed out she DOES qualify for the Credit for Other Dependents ($500 per child) which doesn't have the same earned income requirement. This credit isn't refundable, but if you have any tax liability at all, it can reduce it. Worth checking if your cousin has any other income that creates tax liability.

One thing nobody's mentioned - could your cousin do any small amount of part-time or freelance work to generate just over $2,500 in earned income? Even just $2,501 would qualify him for some of the Additional Child Tax Credit. I was on disability a few years back and did some online transcription work (very flexible hours) just to hit that earned income threshold. Obviously check with disability office about work limitations, but many disability programs allow some limited work.

Just want to point out something else - if he's receiving SSI (not SSDI), there's a very important distinction. SSI is not taxable and doesn't appear on tax returns at all. SSDI might be taxable depending on other income. Make sure you're entering his disability income correctly in the tax software. Also, depending on the twins' adoption situation, there might be an Adoption Tax Credit he could claim if this was a recent adoption. This credit has different rules than the Child Tax Credit.