To the extent the child tax credit exceeds the taxpayer's federal tax liability, the taxpayer is eligible for a refundable credit (up to the amount of such excess, but not to exceed $1,400) only to the extent the taxpayer's earned income exceeds $2,500, in which case the refundable credit will only be equal to 15% of the amount of earned income in excess of $2,500.
So for a family with one child, the marginal tax rate from $2,500 to $11,833 of earned income is negative 15% ($2,500 to $21,166 for married couple with two children). Beyond that the marginal tax rate is 0% until the remaining $600 credit is used.
There might be some considerations here for retired (low income) mustachians with children under 17 and small to moderate amounts of side hustle income that would count as earned income. For example, I believe regular workplace 401k contributions would reduce your amount of earned income, whereas IRA contributions would not. If the employee side of solo 401k contributions similarly reduced earned income, you may not want to shelter small amounts of income that way. Is there a similar thought for not wanting to make the employer side 20% SEP, 401k, etc contributions and simply pass them through as income in order to benefit from the credit?
My quick calculations say that in 2017 while retired we made roughly $7,000 of earned income. Assuming no tax liability, and doing nothing to shelter that income means roughly a $675 cash payment back per eligible child.
While this and ACA exists (with very generous subsidies at low income and steep cliffs) , I'm tempted to think that a retiree who can put off Roth conversions for the future will not want to find themselves generating investment income through either Roth conversion or tax gain harvesting.