No Taxable Income for the Year...

Q.  Can a tax-exempt employer claim the credit if it has no taxable income for the year?

1. Yes. For a tax-exempt employer, the credit is a refundable credit, so that even if the employer has no taxable income, the employer may receive a refund (so long as it does not exceed the income tax withholding and Medicare tax liability, as discussed in Q/A-6).