Five Tax Credits to Boost Your Tax Refund

Tax Deductions and Credits

 Non-Refundable vs. Refundable Credits

There are two major categories of tax credits that can boost your tax refund—non-refundable and refundable.  A non-refundable tax credit can reduce your total income tax liability (the amount of federal income tax you owe for the entire tax year) to zero – but not beyond.  A refundable tax credit will pay excess beyond your tax liability.


Let’s take an example. Say your income tax liability is $950, but that you qualify for a $1,000 non-refundable credit.  If so, your income tax liability would be wiped down to zero.  However, because it is a non-refundable credit, your tax liability can’t become negative.  On the other hand, if the $1,000 credit you qualified for was refundable, you would be paid by the government $50 in excess of the $950 tax liability.

When you file your taxes in the next couple of weeks, here are five popular refundable and non-refundable tax credits that you may be eligible for:

Adoption Credit
What is it for? Qualified adoption expenses
Maximum Credit: $12,650
Income Limitations: Phases out between $189,710 and $229,710 (for 2012)
Refundable? The adoption credit was formerly refundable but is now non-refundable.
Special Notes: Although non-refundable, any unused portion may be carried forward for up to five future tax years.
Learn More:
Child Tax Credit
What is it for? Dependent children you support under age 17
Maximum Credit: $1,000 per child
Refundable? Mostly no, but a portion is refundable for certain low income families
Learn More:
Child & Dependent Care Tax Credit
What is it for? Expenses for child and dependent care so you can go to work
Maximum Credit: Varies based on income; those with AGI exceeding $43,000 have a maximum credit of $600 if care was paid to supervise one child or $1,200 if paid care was for two or more children
Income Limitations: There is no maximum income limit to be eligible for the credit
Refundable? This credit is non-refundable
Learn More:
Earned Income Tax Credit
What is it for? A credit for working, paid to low to moderate income workers
Maximum Credit: Varies based on number of children, from $475 (no children) to $5,891 (3 or more children)
Income Limitations: Maximum eligible income varies based on number of children and filing status but ranges from about $14,000 (single, no children) to $50,270 (married with three or more children)
Refundable? Refundable
Learn More:
Non-business Energy Credit
What is it for? Certain improvements to your home that reduce your energy consumption
Maximum Credit: For the most common improvements, the lifetime maximum is $500, provided the expense you incur are at least $5,000
Income Limitations: None
Refundable? Non-refundable
Learn More:

Comments (1) Leave your comment

  1. My wife and I made several improvements to our home in 2012. I am trying to use the allowable
    Sales Tax deduction figured via Turbo Tax-over $6000., but the Tax still owed does not change, why? I thought this is a legal tax deduction.

Leave a Reply to Phil Miera Cancel reply