Question

What is a refundable credit

Forum|Forum|6 years ago
February 20, 2020
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TurboTax Deluxe Online

Employee

Some examples of "refundable credits" are earned income credit and/or additional child tax credit. These credits are added to your refund. Non-refundable credits such as the childcare credit, can reduce the tax you owe, but are not added to your refund.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

Hal_Al

Employee

"What's a refundable tax credit?

Most tax credits are nonrefundable. This means that they can reduce your tax bill to zero, but the government won't credit you for any extra credits. Refundable tax credits can reduce your tax bill below zero. If your total refundable tax credits exceed your tax liability, the government will pay you the difference. Say your tax bill is $5,000 for the year and you qualify for $6,000 in refundable tax credits. The government will now give you back all the income tax it took from your paychecks, plus an extra $1,000."

Reference: https://www.fool.com/taxes/2019/03/10/what-are-refundable-tax-credits.aspx

The two main refundable credits require that you have some earned income.