What is a refundable credit and what makes refundable credits so important?

A refundable credit is a tax credit that can return cash to you even if you do not owe any money on your tax return. The reason we call the money the IRS sends us our tax refund is because it is money that the government has that should be returned (refunded) to you.

So a refundable tax credit is a credit that increases the size of your tax refund meaning more money in your pocket. Two of the biggest refundable credits are the Child Tax Credit and the Earned Income Credit. Even if you did not earn a lot of money this year, these refundable tax credits can help support you and give your family the cash you need to pay for your expenses.

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All information on this site is provided for educational purposes only and does not constitute legal or tax advice. The Beans, Inc. and Let's Get Set, Inc. are not liable for how you use this information. Please seek a tax professional for personal tax advice.
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