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You are misunderstanding the meaning of refundable and non refundable tax credits.</p>
<p>A non refundable tax credit reduces your tax liability, but if you have not tax liability you get no money. A refundable credit means you can get money back even if you didn’t have any tax liability. It sounds like you have no tax liability? If so you can not get any of the non refundable credit. But you can get the refundable credit of $1000 because you do not need to have paid any tax to get that.</p>
<p>The AO is partially refundable. Up to $1000 is refundable. The other $1500 is not refundable. So, assuming you have $4000 in qualified expenses, if you have $1500 (or more) tax liability you can get the full $1500 non refundable credit plus the $1000 refundable. If your tax liability is less than $1500 then you can only get up to the amount of the tax liability for the nonrefundable part of the credit, plus the refundable credit.</p>
<p>For instance if your tax liability is $700 then you can get $700 of the $1500 non refundable credit (you can’t get the other $800). Then you you can get $1000 refundable credit on top. If you have no tax liability you can not get any of the non refundable credit. Only the refundable.</p>
<p>Many tax credits are non refundable. Few are refundable.</p>