Nonetheless, of the 148,606,578 individual income tax return filers that ye ar, 52,062,499 (or 35 percent) filed what the IRS calls “nontaxable returns,” which means they paid no net individual income taxes.
Among these 52,062,499 filers who did not pay income taxes in 2014, according to Table 3.3 in the report, were 31,129,405 filers who also received $90,276,007,000 in payments from the federal government for “refundable” tax credits.
“In total, taxpayers claimed $105.6 billion in refundable tax credi ts,” said the IRS report. “Of this, $5.5 billion was applie d against income taxes and $9.8 billion against all other taxes. The remain ing $90.3 billion in refundable tax credits was refunded to taxpayers.? ??
"Tax credits are used to offset taxes," the report explains. "Certain tax c redits are also refundable in that if the credit exceeds the total tax owed , the excess can be refunded to the taxpayer."
One example of a refundable tax credit is the “Earned Income Tax Cr edit.” “The Earned Income Tax Credit for 2014,” the IRS explains, “was a maximum of $496 for taxpayers with no qualify ing children, $3,305 for one qualifying child, $5,460 for two qualifying ch ildren, and $6,143 for taxpayers with three or more qualifying children.? ??
For a married couple filing jointly to be eligible for the EIC in 2014, sai d the IRS, “earned income and adjusted gross income had to be less than $43,941 for one child, $49,186 for two children and $52,427 for three children or more.”
A married couple with two children earning $50,000 or more would not qualif y for this refundable credit.
Another refundable credit available in 2014 was for health insurance premiu ms under Obamacare. “Beginning in 2014,” said the IRS, ? ??a taxpayer may have been eligible for the premium tax credit if they, their spouse, or a dependent enrolled in health insurance through the Heal th Insurance Marketplace.”
The effect of “refundable” tax credits, according to the da ta published by the IRS in Figure F of its report, is that the entire class of tax filers earning under $30,000 in 2014 collectively paid a net negati ve in federal income taxes. For example, according to the report, the ? ??total income tax minus refundable credits” paid by the 18,881 ,000 tax filers earning between $20,000 and $30,000 in 2014 was a negative $12,003,000,000.