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 ?
Starting July 1, 2017, the refundable credit will be equal to 15 per cent of a senior's eligible public transit costs for anyone aged 65 or older.
Starting in 1994, Quebec switched to a refundable credit with a very generous rate that declined for those with higher family income (see Appendix Table A-1).
Refundable credit on qualified spend, including non-resident above- and below-the-line payroll
This usually involves falsely claiming higher earned income to qualify for the EITC, which is a refundable credit.
Under these principles, it is reasonable to conclude that a refundable credit that delivers a uniform subsidy to wind energy producers would be more efficient than its nonrefundable counterpart because the distribution of externalities in this context is unknown.
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.
If the calculated amount of the credit exceeds the school district tax for that school year, the excess will be treated as a refundable credit on the taxpayer's personal income tax return for that year [Tax Law section 606 (n-l)(3)(c), (5)].
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.