Tax CreditsReduce Tax On Return
Federal tax credits are entitlements that reduce tax burden; some are a refundable economic benefit.
Certain other entitlements provide an economic benefit; i.e. earned income, stimulus payment and tax rebate. Each of these entitlements is refundable. All entitlements require a determination on eligibility. Eligibility depends on factual circumstances, individual and business. Interview, documentation and a filed return is required.
The factual circumstance, "I earn less than $54K a year" will always reduce tax on a filed return when eligible. Eligibility entitles individuals to additional economic benefit that is refundable. The factual circumstance, "my wife and I both work" will always reduce tax on a filed return when eligible for child care credit. Standing alone however, this entitlement does not provide additional economic benefit that is refundable. The factual circumstance, "my W-2 reflects withholdings" will always reduce a balance due, and increase potential for refund, but never reduces the tax. Withholdings are not an economic benefit; overpayment is refundable. The most basic requirement for claiming credits is to file a tax return. Individuals who did not file a return for 2005, for example, did not provide adequate tax rebate information to receive a rebate for 2006. Pose a tax question or concern relating to credits, stimulus payment and rebates. Return From Tax CreditsTo HOME PAGE |
