Gift from the government?

April 14, 2009 8:44 AM

New York City resident. I earned very little in 2008 and am getting all my withheld taxes back. So far so good. TaxACT seems to think I deserve an additional $145 "New York City School Tax Credit". In other words, I'd be getting more money than I put in. Is this plausible?

I am not anyone's dependent, nor do I have any dependents myself. I have not attended public school in New York City.

posted by limon to Work & Money (9 answers total)

Best answer: I can't speak to your specific question but to your general one. At one point I was making a borderline amount of money so I got all my withheld taxes back plus the Earned Income Credit. I did wind up, as you seem to be, in a negative tax bracket. It does happen and doesn't mean something is necessarily broken.
posted by jessamyn at 8:48 AM on April 14, 2009

It does happen and doesn't mean something is necessarily broken.

Except the tax system. But yeah, this is right.
posted by grobstein at 8:49 AM on April 14, 2009

Best answer: The term for this is a "refundable credit", in case you want to google more information.
posted by pocams at 8:56 AM on April 14, 2009

I think you're probably ok as well. I've gotten more money back than I put in a few times, and according to this it looks like you qualify for that particular credit.
posted by mjcon at 8:58 AM on April 14, 2009

Best answer: New York City residents with an income less than $250K qualify for a $145 NYC school tax credit. The credit is listed in the instruction booklet (pdf) for the IT-150 and IT-201 state income tax forms.
posted by plastic_animals at 10:00 AM on April 14, 2009

Yes, it is plausible that you could get out more than you put in.
posted by meta_eli at 10:18 AM on April 14, 2009

It does happen and doesn't mean something is necessarily broken.

Except the tax system. But yeah, this is right.

The tax system is not broken (at least, in this case). School taxes are assessed on property, so you are paying them indirectly in your rent. You are just getting back some of the tax money that you have already paid.
posted by ssg at 10:56 AM on April 14, 2009

Best answer: As noted above, there are two types of tax credits: refundable and non-refundable. Non-refundable credits are limited by the amount you paid into the system-- so if you paid $3000 in taxes the most you can receive in a non-refundable credit is $3000. (This is a gross oversimplification, but you should get the idea.)

A refundable tax credit may be received regardless of how much you paid in-- the best example of this is of course the earned income tax credit. You could pay $1 into the system through withholding and still get $3000 in earned income credits.

So, TaxACT is treating the tax in question as refundable, which appears to be correct per this page.
posted by miss tea at 11:40 AM on April 14, 2009

The instruction booklet states on page 6 of IT-150, "This credit may be refunded to you, even if you owe no tax."
posted by yeti at 7:30 AM on April 15, 2009