Refundable Credit

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Refundable Credit

A direct, dollar-for-dollar reduction of one's tax liability in which one still receives a tax refund even if one's liability drops below zero. That is, if a taxpayer otherwise owes $2,000 to the government, but takes $3,000 in refundable credits, then the government owes $1,000 to the taxpayer. Relatively few tax credits are refundable; most are limited to the amount of one's tax liability. However, the earned income tax credit is a common example of a refundable credit.

Refundable Credit

A credit for which the IRS will send the taxpayer a refund for any amount in excess of the taxpayer's tax liability.
References in periodicals archive ?
4 Total refundable credits used to offset income tax before credits: Number of returns 9,828,262 10,165,347 3.
These refundable credits could help even more people if policymakers strengthened the EITC for workers not raising children in the home and extended the CTC to the poorest families, especially those with young children.
6664, as amended by PATH, disallowed refundable credits must be taken into account when determining the tax shown on the income tax return.
In contrast, refundable credits are not limited by existing tax liability.
Transferable tax credits may be converted to cash faster than refundable credits, but will always yield less than 100% of the credit amount.
the world s largest consumer tax services provider, today announced its strong support for new legislation directing the Treasury Department to implement uniform standards for taxpayers claiming refundable credits.
The Tax Court held that the amount of tax shown on a return was reduced by refundable credits, but not below zero, for purposes of calculating the Sec.
9) Refundable credits also allow very precise targeting of benefits using family net income as the indicator of family need.
As more credits were introduced this focus expanded to covering children's activities more generally, to providing refundable credits (7) and providing a greater rate of return on the money spent by parents.
One leading reform option is to replace non-refundable credits, which count only against the earned annual income that most postsecondary students lack, with a refundable credit that students qualify for, regardless of annual income.
While Utah has shown that it's serious about attracting R&D investments from well-established and profitable companies, refundable credits offer the most enticing and immediate rewards for startup and pre-revenue companies that are making significant investments in R&D.
Upon review, the federal and provincial governments will assess refundable credits in excess of 40 cents for every dollar spent in R&D.