I searched the forum and did not see a post dedicated to this. Since it expires in 6 months I thought I'd write up what this thing does, which for the working man, isn't much. One thing to note, if you are expected to owe the feds cash, go ahead and spend some more and claim your credit...you may end being worse off financially than if you just paid the taxes.
A tax credit can be refundable or non-refundable.
THE BIO-MASS TAX CREDIT IS NON-REFUNDABLE
To better explain the difference, we have to start with an example:
* Let’s say you owe $500 in taxes before looking at any of your tax credits. Boo!
* You find that you are entitled to a tax credit of $1,500 for that fancy pellet stove you bought. Yay!
o If the tax credit is refundable, then the government would send you a $1000 check. You owe $500, you have a refundable $1500 credit, so you are entitled to the difference.
o If the tax credit non-refundable, then you get nothing. You owe $500, you have a non-refundable $1500 credit, but since it’s non-refundable, you don’t get the difference.
That’s why refundable tax credits are so awesome… unfortunately, there aren’t very many refundable tax credits. In fact, there are only five – the Additional Child Tax Credit, the Earned Income Credit, the Excess Social Security and RRTA Tax Withheld Credit, the First-time Homebuyer credit, and the Health Coverage Tax Credit. Every other credit is non-refundable.
Hope you were not misled by an uneducated stove dealer. I just recently started selling stoves and was humbly educated about this yesterday, to which I researched last night and found to be correct.
It's really unfortunate that our government is ALWAYS trying to screw the working man.
A tax credit can be refundable or non-refundable.
THE BIO-MASS TAX CREDIT IS NON-REFUNDABLE
To better explain the difference, we have to start with an example:
* Let’s say you owe $500 in taxes before looking at any of your tax credits. Boo!
* You find that you are entitled to a tax credit of $1,500 for that fancy pellet stove you bought. Yay!
o If the tax credit is refundable, then the government would send you a $1000 check. You owe $500, you have a refundable $1500 credit, so you are entitled to the difference.
o If the tax credit non-refundable, then you get nothing. You owe $500, you have a non-refundable $1500 credit, but since it’s non-refundable, you don’t get the difference.
That’s why refundable tax credits are so awesome… unfortunately, there aren’t very many refundable tax credits. In fact, there are only five – the Additional Child Tax Credit, the Earned Income Credit, the Excess Social Security and RRTA Tax Withheld Credit, the First-time Homebuyer credit, and the Health Coverage Tax Credit. Every other credit is non-refundable.
Hope you were not misled by an uneducated stove dealer. I just recently started selling stoves and was humbly educated about this yesterday, to which I researched last night and found to be correct.
It's really unfortunate that our government is ALWAYS trying to screw the working man.