Refundable Credits

A refundable tax credit is a credit that can be received as a refund, even if no tax is owed. Tax credits are amounts subtracted from the bottom-line tax due when filing a tax return. Most tax credits can reduce tax only until it reaches $0. Refundable credits go beyond that to give any remaining credit as a refund.

The Refundable Tax Credits include the Earned Income Credit (calculated), the Child Tax Credit (calculated), the Adoption Credit, the American Opportunity Credit, the Premium Tax Credit, the Federal Tax on Fuels Credit, and a handful of others.

Note that in Peter and Paula's case below, there are no refundable credits claimed.




The Earned Income Credit, Adoption Credit, Refundable American Opportunity Credit, Premium Tax Credit, and Other Refundable Tax Credits subsections can be expanded to provide further detail on those specific credits, as seen below.

Instructions on modeling the Adoption Credit can be found here.

More details on modeling the PTC can be found here.