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Deductions & credits
@writechantelle wrote:which if I understand correctly means I need to make sure that I owe taxes before the credit.
In the past I could have changed the W-4
"Owe taxes before the credit" does NOT mean that you would actually owe the IRS money (the opposite of a refund). It means that you have income taxes NOT including your withholding on your W-4.
Let's say your tax return shows $5000 of income tax, but you had $6000 of income taxes withheld from your pay (resulting in a $1000 refund). The credit is based on the $5000 of income tax BEFORE you factor in the incomes taxes withheld from your pay. So in that scenario, a $500 tax credit would result increase your $1000 refund and you would get a $1500 refund.
‎January 25, 2020
12:32 PM
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