A financial services executive investment professional and Certified Investment Management Analyst (CIMA), Jake Kagele is the managing director of Nova Financial Services in Tucson, AZ, which provides financial services to high net worth individuals, trusts, corporations, and company retirement plans. Jake Kagele has successfully secured over $100,000 in corporate tax credits for Salpointe Catholic High School, a Nova Financial Services corporate partner.

A tax credit is any sum of money that taxpayers can deduct from taxes due to the government (tax liability). While tax exemptions and deductions reduce total taxable income, tax credits decrease the actual cost of tax owed. The tax credit figure relies on credit type because there are varieties of tax credits given to businesses or individuals working in distinct industries or locations. Two types of tax credits include:

1. Non-refundable Tax Credit

This tax credit cannot lower a filer’s tax liability below zero. Also, most times, low-income earners do not earn full compensation for credits that they qualify. Examples include Child and Dependent Care Credit, Saver’s Tax Credit, credits for adoption, and Mortgage Interest Credit.

3, Refundable and Partially Refundable Tax Credits

For refundable tax credits, regardless of tax liability, the filer receives the credit’s entire sum. For instance, Earned Income Tax Credit (EITC) is fully refundable. However, there are partially refundable tax credits that lower tax liability and taxable income. For example, the child tax credit (CTC) is refundable if the filer’s income surpasses a $2,500 threshold. Additional Child Tax Credit is the refundable part of the CTC.