Which program is described as a tax credit that is refundable and paid as a refund for eligible workers?

Which program is described as a tax credit that is refundable and paid as a refund for eligible workers?

• A. Medicaid
• B. TANF
• C. SSI
• D. Earned Income Credit

Answer: (D)

The key idea is understanding what a refundable tax credit is and which program fits that description. The Earned Income Credit is a refundable tax credit for low- to moderate-income workers. It reduces the amount of tax you owe, and if the credit amount is larger than your tax liability, you receive the difference as a refund. In other words, you can get money back from the government even if you don’t owe any tax, which is what makes it refundable. The exact credit amount depends on earned income and the number of qualifying children, and you claim it when you file your tax return. Medicaid provides health coverage, not a tax credit. TANF is cash assistance welfare, not a tax credit. SSI offers cash benefits to certain disabled, blind, or elderly individuals with limited income, also not a tax credit.

The key idea is understanding what a refundable tax credit is and which program fits that description. The Earned Income Credit is a refundable tax credit for low- to moderate-income workers. It reduces the amount of tax you owe, and if the credit amount is larger than your tax liability, you receive the difference as a refund. In other words, you can get money back from the government even if you don’t owe any tax, which is what makes it refundable. The exact credit amount depends on earned income and the number of qualifying children, and you claim it when you file your tax return.

Medicaid provides health coverage, not a tax credit. TANF is cash assistance welfare, not a tax credit. SSI offers cash benefits to certain disabled, blind, or elderly individuals with limited income, also not a tax credit.