IRS tax season 2023 will end shortly Tuesday, April 18, 2023 is the due date for filing 2022 tax credits. If you need more time, file for a six-month extension by Tax Day to avoid penalties.
More than 101 million tax returns have already been received and processed by the IRS. As of April 7, according to the agency, more than 69 million tax refunds have been issued, with an average payment of $2,878. Simply because the taxpayer paid too much in taxes is one reason why the IRS issues refunds.
Which Tax Credits Are Refundable?
A tax credit is a reduction and/or refund of taxes paid to the IRS. As previously stated, tax credits can generally be divided into two categories: refundable and non-refundable.
A fully refundable tax credit is available to qualified claimants regardless of the amount of tax already paid. Other refundable credits may have eligibility requirements and a maximum amount that can be claimed based on the total amount of tax paid.
However, the amount of a non-refundable tax credit cannot exceed the amount of tax that the claimant has paid; for example, if the claimant pays $1,000 in income tax, the non-refundable tax credit cannot exceed $1,000. While these won’t increase your refund amount, they can eliminate any remaining tax liability.
Additionally, it should be noted that some credits have both refundable and nonrefundable portions.
It is essential, when preparing your tax return, to investigate all available tax credits you may be eligible to claim. If the credits are refundable, any excess amount will be added to your tax refund. Each year, families leave unclaimed funds totaling thousands of dollars.
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Refundable Vs. Non-Refundable
The IRS provides taxpayers with a list of tax credits and deductions to consider when filing tax returns. Here are some that could put thousands of dollars in your pocket, or at the very least significantly reduce your tax liability.
The EITC is a refundable credit intended for households with low to moderate incomes. If you have three or more children and meet the eligibility requirements, the maximum amount you can receive in 2022 is $6,728.
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