My attempt to explain how Adjustments, Non-refundable, and Refundable Credits affect a return-let me know if this makes sense-click image to open document

Non-Refundable Credits

Non-refundable credits can reduce your income tax liability (the amount of income tax you must pay for the year); however, it can only reduce your income tax liability below zero $0. In other words,  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.

Examples of Non-Refundable Credits: Child Tax Credit, Credit for Other Dependents, Child Care Credit, non-refundable education credit, retirement savings credit)

 Child Tax Credit & Credit for Other Dependents

​Credit For Elderly & Disabled

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Retirement Savings Credit

Credit for Child & Dependent Care Expenses

And Now the Quizzes-Give it a try

Child Tax & Credit for Other Depend.       
Elderly & Disabled Credits                             
Child & Dependent Care Credits                
Retirement Savings Credit                            



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Refundable Credits

Refundable credits are credits that are considered as payments you made--think of them as free money.  if you take your total tax liability and subtract ALL the payments you made (Federal tax you had withheld plus the non-refundable credits) anything that is left over is refunded to you!

Examples of refundable credits: EITC (Earned Income Tax Credit, Education Credit, Additional Child Tax Credit, etc.)

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