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 ?
federal refundable tax credits reduce personal current tax liabilities
According to Americans for Tax Reform (ATR), the Governor's proposal would not violate his anti-tax pledge because refundable tax credits are considered a "spending program," and converting them to non-refundable was not a tax increase in the eyes of ATR.
Because the Maineses had not paid any state income tax in the years in question, the court rejected their argument that the refundable tax credits were excludable returns of capital.
The current system of refundable tax credits delivered through the tax system began to take its current form in the early 1990s with introduction of the Canada Child Tax Benefit and the Goods and Services Tax Credit.
At stake is 12 years of refundable tax credits worth up to $3,000 per year for each W-2 employee involved in a qualifying relocation.
The most immediate needs are for high-quality early childhood programs that help keep the most vulnerable children on track, child care subsidies so parents don't have to pull children out of care, unemployment insurance, food stamps, refundable tax credits so families don't go without food and basic necessities while parents are unemployed, health insurance, and extra funding for state health care budgets so that coverage isn't cut when families need it most.
To help working families afford coverage, advanceable and refundable tax credits should be available, phasing out as income approaches 400 percent of the federal poverty line.
McCain's plan includes cutting the estate tax, eliminating the Alternative Minimum Tax, eventually doubling the $3,500 child tax deduction for every dependent, and providing refundable tax credits of $2,500 for individuals and $5,000 for families, who buy health insurance.
For example, one could easily imagine an integrated tax system with $1,000 per person refundable tax credits and just two tax rates: 20 percent of the first $50,000 of income and 30 percent on income in excess of $50,000.
there has been heated debate about whether refundable tax credits are an