Income Tax Credit Definition

A separate nonrefundable credit that is part of the general business credit.
Income tax credit definition. Tax credit definition is an amount of money that is subtracted from taxes owed. A direct dollar for dollar reduction of one s tax liability that is if a taxpayer otherwise owes 2 000 to the government in income tax but has 1 000 in tax credits then the taxpayer only owes 1 000 tax credits may be either refundable or non refundable a refundable tax credit means that if one s tax liability goes below zero the government owes the taxpayer the remainder of the credit. For a person or couple to claim one or more persons as their qualifying child requirements such as. The united states federal earned income tax credit or earned income credit eitc or eic is a refundable tax credit for low to moderate income working individuals and couples particularly those with children.
Work opportunity tax credit. The amount of eitc benefit depends on a recipient s income and number of children. The work opportunity tax credit is designed to encourage employers to hire workers from.