What Are Tax Credits?
Tax credits are used to offset what you may owe in taxes. There are two types of these credits.
Nonrefundable Credits
Nonrefundable credits offset your tax bill and can go as far as getting you a refund. But your refund can only be as much as you had owed in taxes. Some nonrefundable credits include the Adoption Credit, the Saver’s Credit, etc.
Refundable Credits
Refundable credits offset your bill and can go as far as getting you a refund. These types of credits can go towards a refund even if it is more than what you owed in taxes. An example of a refundable credit is the Child Tax Credit.
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Additionally, the IRS has an extensive list of every credit where you can learn more.
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