Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
New Member
posted Jun 4, 2019 11:06:42 PM

Are tax breaks refunded?

I have Student Load Interest Paid, Other Income Taxes, and IRA contribution tax breaks that total $658, but I'm only getting refunded 11 for my federal refund. How is this possible?

0 1 164
1 Replies
New Member
Jun 4, 2019 11:06:43 PM

Those items are deductions which help to reduce your taxable income, not credits which would reduce your taxes.  For example; if your W2 income was $9,500 it would be reduced by the $658 in deductions you have listed, to give you adjusted gross income of $8,842.  After subtracting your standard deduction and exemption you would get your taxable income. 

With a credit; if you owe $500 in taxes and you have a tax credit such as American Opportunity Credit for Education for $600 and you paid $2500 taxes for the year, you would get a refund of; $2,600 which is $500 taxes owed taken from the $600 credit, giving you a refund of $100, and as in this example, the education credit 'paid' for the taxes owed, you will also add the $2500 in taxes that was paid to receive a refund of $2,600 in credits.  For more information on the difference between deductions and credits please see; Turbo Tax - Difference Between A Tax Credit And A Tax Deduction.