refundable credits

Refundable credits are tax benefits that can reduce your tax bill below zero, meaning you could receive a refund even if your total credits exceed your owed taxes. Essentially, if a refundable credit is larger than your tax liability, the government pays you the difference. Examples include the Earned Income Tax Credit and the Child Tax Credit. These credits are designed to provide financial support to eligible individuals or families, helping to offset costs and improve financial stability, regardless of whether they owe taxes or not.