Answer to Question #172182 in Economics for lindsay

Question

1.     What are the grounds for filing a claim for a tax refund or tax credit? 

Answer 1

The Earned Income Tax Credit (EITC) was set up by Congress to allow lower-wage earners the ability to hold on to more of their paycheck. Households that qualify for the credit can reduce their tax liability to zero, in which case they will owe no income taxes.

A tax refund is a reimbursement to a taxpayer of any excess amount paid to the federal government or a state government.

Taxpayers tend to look at a refund as a bonus or a stroke of luck, but it most often represents an interest-free loan that the taxpayer made to the government. In most cases, it is avoidable.