Tax credits fall into a few broad categories:
Energy credits, such as the Residential Energy Credit
Education credits, such as the Hope or Lifetime Learning credits
Child related credits, such as the Child tax Credit
Income based credits, such as the Earned Income Credit
Tax credits are either refundable or non-refundable.
A refundable credit may not only reduce to zero any tax you owe but, in addition, ensure you get a tax refund from the IRS. the Additional Child Tax Credit is an example of a refundable credit.
A non-refundable credit can only bring your tax liability to zero. Any credit amount in excess of the tax you owe is simply void. The only exception to this rule is the Adoption Expenses Credit whose unused portion can be carried forward to the next year.
What kind of tax credits are available?
Tax credits fall into a few broad categories:
Energy credits, such as the Residential Energy Credit
Education credits, such as the Hope or Lifetime Learning credits
Child related credits, such as the Child tax Credit
Income based credits, such as the Earned Income Credit
Tax credits are either refundable or non-refundable.
A refundable credit may not only reduce to zero any tax you owe but, in addition, ensure you get a tax refund from the IRS. the Additional Child Tax Credit is an example of a refundable credit.
A non-refundable credit can only bring your tax liability to zero. Any credit amount in excess of the tax you owe is simply void. The only exception to this rule is the Adoption Expenses Credit whose unused portion can be carried forward to the next year.
