A tax refund is a wide concept that the Internal Revenue Service needs to return back to the taxpayer. It happens to be many times that the taxpayer might end up paying more amount of tax as compared to what he is actually liable to pay; such amount needs to be refunded.
In the concept of the taxation, there are refundable tax credits as well as non-refundable tax credits, a majority are non-refundable ones. The non-refundable tax credits amount to reduce the liability of the taxpayer whereas, the refundable ones amount to repay the extra amount being paid.
However, in this wide concept of taxation there are a few things that every taxpayer must know in order to stay aligned with the taxation policies for refunds:
Refunds With Refundable Tax
When a taxpayer is entitled to a refundable tax credit, he or she is being provided with a reduction in the tax liability, however, if chosen a tax refund payment may also be offered by the authorities in certain circumstances. The amount refunded by the authorities’ amounts to be the difference between the amount of tax actually paid by you and the amount of tax liability you actually have. Sometimes, the amount turns out to be a substantial one and sometimes is very low; in any case if you qualify the amount is being refunded.
You May Qualify With Zero Tax Liability
It has been thought that with a zero tax liability qualifying a tax refund is impossible. However, in the case where you actually owe a refund from the authorities and you have no tax liability for the year you will receive the amount you are entitled to receive.
The criteria for qualifying for a tax refund vary from person to person and situation to situation. All these criteria are being set by the tax authorities and according to these criteria, refunds are being made to qualify. These criteria are based on matters like the amount of income earned by the taxpayer, the size of the family and much more.
The ones who earn a higher level of income are subjected to different criteria and the ones who earn a lower level income are subject to different criteria.
Changes Associated Every Year
The criteria and the availability of the tax credit may change year to year depending upon the authorities. Power to change the criteria and the availability of the tax credits to be refunded might not stay constant and may change every year.
Authorities May Change the Rules
The power to change the rules and the qualification criteria lie in the hands of the relevant tax authorities. The tax authorities may at any time change any rule they want. It may affect the refundable and non-refundable tax credits, may affect the level of income subjected to tax and much more. It is always advisable to remain up to date with the recent tax laws prevailing in the country while calculating your tax liability, credits, and refunds./things-need-know-tax-refunds//wp-content/uploads/2014/12/Tax-Refunds150.jpg/wp-content/uploads/2014/12/Tax-Refunds150-133x133.jpgTaxes