For Tax Year 2022, the credit is NON-REFUNDABLE meaning it can only reduce your tax liability.
Once that happens, if there is remaining credit, it is carried forward to the next tax year.
EXAMPLE
- If in 2022 you end up with a bigger credit than you have income tax due — a $3,000 credit on a $2,500 tax bill, for instance—you can't use the credit to get money back from the IRS. Instead, you can carry the credit over to the following tax year.
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