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
Refundable Tax Credits Hoeven said the advanceable, refundable tax credits should be robust enough for lower-income individuals to afford to purchase a health insurance plan.
The exception is refundable tax credits like the EITC, which are tantamount to direct income support for moderate-income, working Americans.
The Old Dominion State offers military locations (the Pentagon, the Norfolk Naval Shipyard), colonial heritage (Williamsburg, Jamestown), and picturesque landscapes (the Appalachian Mountains, Atlantic coast beaches), as well as refundable tax credits.
30, 2015, by the IRS Chief Counsel's Office that reversed the government's application of the accuracy-related and fraud penalties in cases involving disallowed refundable tax credits.
Pipes notes in the section on refundable tax credits that lawmakers who have proposed refundable tax credit measures in the past include Rep.
Although the law specifically states that refundable tax credits for the purchase of insurance are available only when coverage is bought on "an exchange established by the state," the majority--Chief Justice John Roberts along with Justices Anthony Kennedy, Stephen Breyer, Ruth Bader Ginsburg, Elena Kagan, and Sonia Sotomayor--found this phrase "ambiguous.
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.
Refundable tax credits may seem straightforward, but it is important to know the payout period and the tax consequences of the refund as well.
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.