The Lifetime Learning Tax Credit is being added to our refund. The LLC is not refundable. Is this a problem with the software?

[CH614]

For example, if we owe $500 in taxes, it is saying that we are getting a $1500 refund after the $2000 LLC is applied. Per the IRS, "You can use the credit to pay any tax you owe but you won’t receive any of the credit back as a refund."

[DawnC]

A nonrefundable credit can't reduce your tax liability past zero.   Check Form 1040.  Your tax liability is on Line 18.      Refundable vs. Nonrefundable credits

How to Preview your Tax Return

[CH614]

Hi Dawn! Yes I agree (and hence my question). I feel as if the software is not applying the credit appropriately. Any excess credit is not refundable. Does TurboTax have contact info for the software team to investigate?

[MayaD]

In your example are you referring to the amount that you still owe? Your tax liability is the total amount of tax on your income minus any non-refundable credits, and it is different than the amount that you still owe. Your federal tax liability amount is found on Form 1040 (line 24).

[CH614]

Hi @MayaD  and @DawnC ! 

This is what is occurring: 

1-The software says we owe $500 in taxes

2-The $2000 Lifetime learning credit is applied

3-The software is now saying we are getting a $1500 refund.

This is NOT correct since the LLC is non refundable. I have removed and re-added my educational deductions several times with the same result. While our tax liability is $0, we should not be receiving any refundable money for the credit.

Thank you for the help!

[SantinoD · Accepted solution]

When it says its "non-refundable", this doesn't mean that you can't get a refund on your Tax Return. Non-refundable simply means that it can only reduce your tax liability to $0.  Tax liability is different than total Tax owed when you are done preparing your taxes. 

It is possible that you had federal income tax withheld or other "refundable" Tax credits that would give you a refund, even though your Tax liability is $0.

If you take a look at your Tax Summary (you can find this under the tools section on the left panel of your TurboTax account), it will break down how you are getting a refund.

@CH614