Non-Refundable Tax Credit

A non-refundable tax credit is a dollar-for-dollar reduction in the amount of income tax that an individual or business owes. Unlike a refundable tax credit, which can result in a refund to the taxpayer if the amount of the credit exceeds the taxpayer's tax liability, a non-refundable tax credit can only reduce the amount of tax owed to zero.

Non-refundable tax credits are often used to encourage certain behaviors or activities, such as saving for retirement or investing in renewable energy. They can also be used to offset the impact of other taxes, such as the Alternative Minimum Tax (AMT).

There are a number of different types of non-refundable tax credits, each with its own set of rules and requirements. Some of the most common types of non-refundable tax credits include:

• The Earned Income Tax Credit (EITC): The EITC is a refundable tax credit that is available to low- and moderate-income workers. The amount of the credit depends on the taxpayer's income and filing status.
• The Child Tax Credit (CTC): The CTC is a refundable tax credit that is available to taxpayers who have qualifying children. The amount of the credit depends on the number of children the taxpayer has and their income.
• The American Opportunity Tax Credit (AOTC): The AOTC is a refundable tax credit that is available to taxpayers who are paying for college or other post-secondary education. The amount of the credit depends on the taxpayer's income and the cost of their education.
• The Lifetime Learning Credit (LLC): The LLC is a refundable tax credit that is available to taxpayers who are paying for college or other post-secondary education. The amount of the credit depends on the taxpayer's income and the cost of their education.

Non-refundable tax credits can be a valuable way to reduce your tax liability. However, it is important to understand the different types of non-refundable tax credits and their eligibility requirements before claiming them.