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Non-refundable credits can reduce your income tax liability plus any Advanced Premium Tax Credit (Marketplace) Repayment); however, it can only reduce your income tax liability and Advanced Premium Tax Credit (Marketplace) Repayment liability to zero $0.  (For example, if you have an income tax liability of $2,254, then the most non-refundable credit you can get is $2,254.  You could get less or no credit, but you can't get more than $2,254).  See PUB 4012 Section G

Examples of Non-Refundable Credits:
  • Child Tax Credit 
  • Credit for Other Dependents,
  • Child & Dependent Care Credit  (aka Daycare Credit)
  • Education credit (Lifetime and non-refundable American Opportunity)
  • Retirement Savings Credit
  • Credit for Elderly & Disabled
  • Residential energy credits
  • Foreign Tax Credit
  • and more


**Non-refundable credits do not pay/offset self-employment tax, tax on early distribution from retirement accounts, First Time Homebuyers Credit, or other taxes.

Below is additional information on some specific Non-Refundable Credits
Mortgage Certificate Credit (MCC)-- Out of Scope for VITA  (though I think it shouldn't be as it is a credit ideal for our target audience)
What it is? Borrowers with an MCC can receive a non-refundable credit (up to $2,000) based on the amount of mortgage interest paid and the terms of the certificate. They can receive the credit as long as they pay interest and use the home as their primary residence.
What is needed? A copy of the Mortgage Certificate and 1098-T showing mortgage interest paid.
Carryforward-- I love this part, any unused credit carry's forward to next year!
​To learn more see IRS Form 8396
**Note-I have submitted this twice to the IRS to have them consider allowing it to be In Scope for VITA. I didn't this past year but will try again. It is super duper easy to do. 
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Please note: I, Mary Meador, AM NOT a certified accountant or tax law expert. I volunteer with VITA providing free tax preparation for individuals and families whose income is less than $66,000 a year. We deal with simple returns at our sites.  I cannot guarantee the accuracy of all the information on this site as tax laws change and I may not have a clear understanding of complicated issues. I am trying to provide basic tax preparation information for our volunteers to get started--remember Publication 4012 is your go-to resource for questions, as well as irs.gov and Publication 17.  I hope you find this information useful and easy to understand. Thanks for being a VITA/TCE volunteer!
**I am human, so if you find a mistake, please let me know so I can fix it--we are all in this together**
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