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 ?
practical matter, uniform refundable credits are generally the most
In order to prevent loss of tax benefits to low-income taxpayers, eligible persons can use last year's income to figure these refundable credits if it produces a greater benefit than results from using 2005 income.
Nonrefundable" means that if you don't have any tax liability, you don't get the money Refundable credits include the earned income tax credit, which pays certain employed people, even if they don't have to pay any income taxes.
Brookings researchers estimated the benefits that could accrue to cities and suburbs from new or expanded state refundable credits pegged to the federal EITC.
Tax relief, if we have it at all, should focus on families with incomes under $50,000 and include refundable credits for families with no federal income tax liability.
Other refundable credits - how to insure client receives available credits, new car, first time homebuyer, and energy.
VITA volunteers will determine if taxpayers qualify for the EITC and other refundable credits.
1, 2015, for certain long-production-period property and certain aircraft), and convert a portion into currently refundable credits.
The effects of refundable credits were included in "High-Income Tax Returns for 2009," which was published in Statistics of Income Bulletin, Spring 2012.
For example, refundable credits often offer the most enticing and immediate rewards for start-up and prerevenue companies that are making significant investments in R&D.
In this regard, refundable credits can be tied to specified activities with public benefits.
B) A married taxpayer filing jointly has $2,000 in earned income, one qualifying child, and $1,100 in net tax liability (resulting from other unearned income) prior to the application of refundable credits and the child credit (the taxpayer's actual liability after the child credit is $100).