Question

How does the earned income credit produce a "negative" income tax?

The earned income credit can produce a "negative" income tax because taxpayers who are eligible to claim the credit may _____________

Options:

• only take a credit equal to the tax owed.
• receive a refund for the credit even though the credit exceeds their tax liability.
• not receive a refund of the credit if no income tax was withheld.
• not received a refund of the credit if they are not required to file a return.

Answer 1

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How does the earned income credit produce a "negative" income tax?
The earned income credit produce a "negative" income tax because people with no or low income gets refundable credit even when they don’t have nay tax liability.
The earned income credit can produce a "negative" income tax because taxpayers who are eligible to claim the credit may _____________
Options:
only take a credit equal to the tax owed.
receive a refund for the credit even though the credit exceeds their tax liability.
not receive a refund of the credit if no income tax was withheld.
not received a refund of the credit if they are not required to file a return.
Answer
receive a refund for the credit even though the credit exceeds their tax liability.