Refundable Credit

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 ?
The bipartisan Research and Development Tax Credit Expansion Act would expand the R&D tax credit for new and small businesses by doubling the refundability of the credit from $250,000 to $500,000, extending the credit to all small businesses with less than $10 million in annual revenue, and expanding how the refundable credit is claimed against payroll taxes.
In this scenario, the combined tax liability would decrease by $500 because the $1,000 increase in the refundable credit on the student's return outweighs the parents' loss of the $500 family tax credit (see the table "Dependent With Parents Over Credit Phaseout").
A student who claims the credit under this strategy is not entitled to any refundable credit.
(34) While the EITC is not the only refundable credit, it is
Refundable credit on qualified spend, including non-resident above- and below-the-line payroll
When a low-income, low-tax worker qualifies for a refundable tax credit, and the size of the refundable credit is bigger than the worker's general income tax bill, the Internal Revenue Service (IRS) pays the worker for the difference between the tax credit and the general tax bill.
36B refundable credit for coverage under a qualified health plan.
Skate rentals, $3 with $25 refundable credit card or cash deposit required per skate rental.
* If the amount of advance credit payments you get for the year is less than the tax credit you're due, you'll get the difference as a refundable credit when you file your federal income tax return.
The refundable credit is paid to the insurer to help fund the purchase of certain health insurance plans.
Another option is to make the CFTC and similar provincial credits a refundable credit similar to the Children's Activity Tax Credit (CATC) in Ontario and the Active Families Benefit in Saskatchewan.
A refundable credit, which offsets the costs of R&D even when the costs are greater than total tax liabilities, could help smaller, less-established companies with access to some funds or external financing to initiate R&D projects (HR 3156, as currently designed, is not refundable).