Why Do We Have an Income Tax?
Civics 101
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Earn More in Tax Credits Than You Owe in Taxes?
Some credits are refundable, meaning that if the value of the tax credit is more than you owe in taxes, you have a negative tax bill. So if your tax bill was $500 and you had $600 in refundable tax credits, you would not owe any taxes and you would get $100. One of the main tax credits that is refundable is the earned income tax credit, which is specifically for people with lower incomes. You have to have actually earned an income to qualify. Many of them are not. For example, the tax credit for buying an electric vehicle. If you bought certain new electric cars in 2022, you could qualify for a $7,500 tax credit.
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