• Form 1040 Line 19 and Schedule 1 Lines 1 to 6 are for nonrefundable credits, which can only offset taxes due (1040 Line 16). In contrast, refundable credits benefit the taxpayer even if no tax is due. The Earned Income Credit, for example, often results in a tax refund of thousands of dollars.
    • The child tax credit is a hybrid – part of the credit can be nonrefundable, and the rest refundable. Similarly, the American Opportunity Credit remains a hybrid – it goes to Schedule 3 Line 3, as needed, and the refundable portion, if any, can flow to Form 1040 Line 29.
  • Nonrefundable credits are on TaxSlayer’s Credits page [Deductions > Credits Menu] (Pub 4012 tab G).
  • If the amount of nonrefundable credits is greater than the tax due, that may affect other calculations, such as the amount of capital loss carryover used, or the amount of a state tax refund that is taxable.
    • Enter in TaxSlayer all information for nonrefundable credits for which the taxpayer is eligible, regardless of their anticipated effect on the tax owed. They may provide a benefit in the next tax year.

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