Can you receive a refund greater than the amount you paid in federal taxes?

Can you receive a refund greater than the amount you paid in federal taxes?

Postby wikvaya » Tue Apr 05, 2011 11:05 am

Someone I know has a part time job, pays less than 2K in taxes and gets a refund for over 8K. How is this possible?
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Can you receive a refund greater than the amount you paid in federal taxes?

Postby donatus » Tue Apr 05, 2011 11:06 am

People who work but don't make a very large income qualify for some extra tax credits, especially if they're supporting children on that income. The theory is that they deserve a break because at least they're trying to support themselves, not just living off other taxpayers' money.

(There are other credits that are refundable as well: the first-time homebuyer's credit, for example, or various education credits.)
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Can you receive a refund greater than the amount you paid in federal taxes?

Postby rook39 » Tue Apr 05, 2011 11:08 am

It's called Refundable Credits. See the IRS site for explanation of the credits.
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Can you receive a refund greater than the amount you paid in federal taxes?

Postby jeraldo » Tue Apr 05, 2011 11:09 am

with refundable credits, such as MWP, EIC, and child tax credits. Or they are committing fraud.
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Can you receive a refund greater than the amount you paid in federal taxes?

Postby valerio63 » Tue Apr 05, 2011 11:11 am

I see it all the time.
Home buying tax credit, children, tax deductions, earned income credit, etc.
Have you ever heard that 40% of lower income wage earners never pay any income tax?
Could it be true?
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Can you receive a refund greater than the amount you paid in federal taxes?

Postby pieter88 » Tue Apr 05, 2011 11:12 am

I see it all the time.
Home buying tax credit, children, tax deductions, earned income credit, etc.
Have you ever heard that 40% of lower income wage earners never pay any income tax?
Could it be true?
yes, Earned income tax credit is the biggest one, but there are other refundable credits!
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Can you receive a refund greater than the amount you paid in federal taxes?

Postby atur91 » Tue Apr 05, 2011 11:14 am

Yes, its possible to legally get a refund of more than the amount paid.

There are several tax credits that are refundable, which means that if the credit is more than the amount of your tax liability, the difference is refunded to you. As an example, the $8,000 first time home-buyer credit was refundable, so a person who owed $3000 in federal taxes could use the credit to pay their tax liability and get all of their tax payments back plus the extra $5000.

The most common refundable credits are the earned income credit (EIC) and the Additional Child Tax Credit (ACTC). Both of these are refundable credits for low income parents and its actually quite common that a parent with several children would get upwards of $5000 in extra refund (above what they paid in) from these credits.

Obviously there are strong feelings on both sides of these credits. I used to hate the EIC but I realized that its an incentive for people to work even though they might be just as well-off to collect welfare and food stamps. I'd rather see a single Mom work 40 hours a week, earn $20k and get an extra $6k from the federal government than see her sit at home and get $20k worth of food stamps, welfare, and government housing assistance.
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Can you receive a refund greater than the amount you paid in federal taxes?

Postby nathan67 » Tue Apr 05, 2011 11:16 am

Yes, in your dreams
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Can you receive a refund greater than the amount you paid in federal taxes?

Postby crespin64 » Tue Apr 05, 2011 11:17 am

Unfortunately, yes you can because of tax credits. That is total bullsh!t that anyone should be able to get more than you pay in but you lazy no good bums who cheat the system most certainly can. They are called worthless no good slugs to society. If that is right up your alley, then look into it.
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