Most tax credits are non-refundable and simply reduce the amount of taxes a filer owes. Refundable tax credits differ because they provide a refund to a filer even if the credit value is more than the amount of taxes owed. Refundable tax credits are important because they have the same value for all workers regardless of their income.
The Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) are federal refundable tax benefits that help workers care for their families, withstand unexpected economic changes, and reduce poverty.
To claim any tax credit, eligible workers must file a tax return. Preparing a tax return can be complicated and may seem overwhelming. That’s why it’s so important for workers to know about Volunteer Income Tax Assistance (VITA) and other free tax filing programs.