And I just now confirmed again that that's the way it does work. Increasing the amount withheld for taxes and increasing estimated tax payments produces a corresponding increase in the tax refund. Filing Single, I entered a W-2 with $20,000 in box 1, $20,000 in box 2 and $2000 in box 12 with code D. I also entered a $100,000 Q1 estimated federal tax payment. The Retirement Savings Contributions Credit reduced the otherwise $708 income tax liability to zero, resulting in a tax refund of $120,000.
Changing to Married Filing Jointly and $41,000 in box 1 of the W-2 results in an entire $1,000 credit being applied, reducing the income tax liability from $1,513 to $513 and a refund of $119,487.
