If you have earned any income at all, even if you are exempt, you can claim this credit if you qualify. This is a tax credit you receive for working and earning low to moderate income. One of the most common refundable tax credits is the Earned Income Tax Credit. These are tax credits that can create negative tax liability resulting in a tax refund, even if you haven’t paid taxes. Refundable tax credits, on the other hand, can result in cash back. Some tax credits are only applied up to the point that you zero out the taxes owed.

Refundable Tax CreditsĮven if you are exempt, you can still receive a tax refund if you qualify for a refundable tax credit. But there are conditions that can result in being able to receive a tax refund, even if you are exempt from paying taxes. And, normally, since you didn’t pay taxes, you aren’t eligible for a tax refund. Those who are exempt, though, won’t have taxes taken from their paychecks.

However, if you had any tax liability at all in the previous year, or you expect to owe for the current year, you can’t be considered exempt. If your income is less than your standard deduction, then you are exempt – you don’t have to pay taxes. Normally, there is a standard deduction (In 2018, it’s $12,000 for single, $24,000 married filing jointly). When you fill out your W-4 from your employer, you add your withholding allowances.

However, what happens if you don’t have to have money withheld from your paycheck? Can you still get a tax refund if you are considered exempt? What Qualifies You as Exempt? Additionally, tax deductions and credits can also lower your tax liability and result in a situation in which you are entitled to a refund. One of the most common reasons that a taxpayer receives a tax refund is because extra money has been withheld from their paycheck. When you receive a tax refund, it means that you have paid more money than you actually owe. The point of a tax refund is for the government to return some of the money that you have overpaid.

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