tax credit

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Related to Tax credits: Child Tax Credits

Tax credit

A direct dollar-for-dollar reduction in tax allowed for expenses such as child care and R&D for building low-income housing. Compare tax deduction.

Tax Credit

A direct, dollar-for-dollar reduction of one's tax liability. That is, if a taxpayer otherwise owes $2,000 to the government in income tax, but has $1,000 in tax credits, then the taxpayer only owes $1,000. Tax credits may be either refundable or non-refundable. A refundable tax credit means that if one's tax liability goes below zero, the government owes the taxpayer the remainder of the credit. Non-refundable credits mean that the tax liability cannot go below zero. 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.

tax credit

A reduction in the amount of taxes owed. For example, corporations are permitted a credit on U.S. taxes for taxes paid to foreign governments, and individuals could, for a number of years, claim a tax credit for a portion of expenditures for certain energy-saving home improvements. A tax credit is more valuable than a deduction of an equal amount because the credit results in a reduction in tax owed rather than a reduction in taxable income. See also foreign tax credit.

Tax credit.

A tax credit is an amount you can subtract from the tax you would otherwise owe. Unlike a deduction or exemption, a credit is a dollar-for-dollar reduction of your tax bill.

For example, if you pay someone to care for your young children or for elderly or disabled relatives, you may be able to subtract that money, up to a set limit.

Among the other tax credits for which you may qualify are the Hope scholarship and lifetime learning education credits, a credit for purchasing a hybrid car, or a credit for adopting a child. The list changes from time to time.

Some but not all credits are available to people whose income is less than the ceilings Congress sets. Other credits are available to anyone who has spent the money.

tax credit

see CORPORATION TAX, DIVIDEND.

tax credit

see NEGATIVE INCOME TAX.

tax credit

A direct reduction against income tax liability. Credits reduce taxes dollar-for-dollar. Common tax credits include

1. Earned income credit, used to assist low-income taxpayers.
2. Saver's tax credit, for contributions to qualified retirement plans by low-income individuals.
3. Child-related credits for child- and dependent-care expenses, adoption expenses, and the child tax credit.
4. Education credits, particularly the Hope credit and the lifetime learning credit.
5. Credits for the elderly or disabled.
6. Mortgage credit certificate programs by some state and local governments may be used for tax credits on federal income taxes. 7. Work opportunity credits (for businesses).
8. Rehabilitation credits.

Contrast with a tax deduction, which merely reduces income on which taxes are calculated.

References in periodicals archive ?
The tax credit may be paid in advance by the federal government directly to health plans and health insurers on a monthly basis, starting at the point of enrollment.
Tempus will not only take advantage of our turn-key technology solutions and improve the dynamics in which they facilitate tax credit transactions on behalf of its customers, but they will also bring new tax credit product specialties to our network of professionals who are engaged in all aspects of tax credits.
Developers of low-income housing typically sell the tax credits to syndicators, who in turn find investors who have tax liability they wish to offset.
CityScape Capital Group, LLC, created the CCG Historic Partners Family of Funds to invest in historic tax credit projects throughout the country.
Lynn Jacobs, director of the state Department of Housing and Community Development, which made the recommendation, said tax credits provided in the East Valley zone will continue for five years and that she will try to find ways to accommodate the area.
Anyone who thinks they may be receiving overpayments of tax credits should call the Tax Credit Helpline on 0845 300 3900.
California Enterprise Zone (EZ) programs offer substantial tax credits and deductions to businesses located within any of 42 EZ regions, representing roughly 12 percent of the state (www.
The issue of the continuance of federal tax credits was raised by the Prospectors and Developers Association of Canada (PDAC) at Canada's mines ministers' annual conference in New Brunswick last September.
TEI previously filed a brief amicus curiae in support of DaimlerChrysler's petition for writ of certiorari, urging the Court to review the decision finding Ohio's investment tax credit unconstitutional.
based Brightlight Pictures and Lions Gate Films to move to Ontario, which had increased its tax credits months earlier.
a review of tax credits for businesses to encourage employment of persons with disabilities and, in particular, similar to that offered in the United States.
In exchange, the company would have been entitled to an investment tax credit against its Ohio franchise tax liability in the amount of 13.