Tag Archives for " UNDERSTANDING TAXES "

TAX CREDIT

                        TAX CREDITS

TAX CREDIT TAX CREDIT IS A CREDIT GIVEN TO YOU THAT IS SUBTRACTED FROM THE AMOUNT OF TAXES YOU OWE TO THE FEDERAL AND STATE GOVERNMENT

   MOST CREDITS ARE A DOLLAR BY DOLLAR REDUCTION, MEANING IF YOU OWE THE IRS 1500 DOLLARS AND YOU GET A 1500 DOLLAR CREDIT IT WOULD LOWER THE AMOUNT / TAX LIABILITY TO ZERO.

CREDITS CAN BE REFUNDABLE OR NON-REFUNDABLE. THOSE ARE THE TWO TYPES OF CREDITS THERE ARE.

EX- CHILD TAX CREDIT IS A REFUNDABLE  CREDIT SO IF YOU OWE 1000 TO IRS AND GET A CHILD TAX CREDIT OF 1500 DOLLARS YOU WILL GET THE CREDIT OF 500 THE EXCEeD­ING AMOUNT OF TAXES YOU OWE.

WHEREAS NON-REFUNDABLE DOES NOT EXCEED THE AMOUNT YOU OWE. NON REFUNDABLE CREDIT ONLY LOWERS THE AMOUNT TO ZERO OR THE AMOUNT OF THE CREDIT