Yes, your Child Tax Credit (CTC) can be reduced if you owe taxes from previous years or other federal or state debts.
Refunds of an overpayment of a tax liability, including the portion related to the Child Tax Credit, may be reduced (offset) for overdue taxes from previous years or other federal or state debts that you owe. This means that if you receive a refund after filing your tax return, any remaining Child Tax Credit amount to which you may be entitled may be part of the calculation of whether you have an overpayment of your income tax liability. A refund of this overpayment may be subject to offset for tax debts or other federal or state debts you owe.
Additionally, refunds of an overpayment of a tax liability, including the portion related to the Child Tax Credit, may also be reduced for past-due child support. However, advance Child Tax Credit payments were not reduced (offset) for overdue taxes from previous years, other federal or state debts, or past-due child support.
It is important to note that tax refunds, including those related to the Child Tax Credit, may also be subject to garnishment by state and local governments and private creditors, to the extent permitted by state and local laws. This includes garnishment in a court order involving a non-federal party, such as fines related to a crime, administrative court fees, restitution, and other court-ordered debts.
Sources:
§ 24. Child tax credit
Notice 2018-70
IRM Part 21. Customer Account Services. Chapter 4. Refund Inquiries. Section 6. Refund Offset
