TC 766 vs. TC 768: Distinguishing Refundable from Non-Refundable Credits

When taxpayers review their IRS account transcript, few entries generate more questions than TC 766 and TC 768. Both are credit-related transaction codes, both can increase a refund, and both often appear around the same time. Yet they represent very different mechanisms inside the IRS accounting system.

Understanding IRS transaction codes 766 768 clarifies how credits are recorded, why PATH Act timing applies, and when a refund is truly on the verge of release.

How the IRS Ledger Records Credits

The IRS account transcript functions like a general ledger. Every credit, adjustment, and payment is recorded as a transaction code with a posting date and amount.

For credits, the IRS distinguishes between:

• General refundable credits
• Credit-specific programs with unique statutory rules

That distinction is where TC 766 and TC 768 diverge.

What Is TC 766?

TC 766 represents a general refundable credit applied to a taxpayer’s account.

TC 766 is commonly used for:

• Child Tax Credit (CTC)
• Additional Child Tax Credit (ACTC)
• American Opportunity Credit (refundable portion)
• Other refundable credits not assigned a dedicated transaction code

When TC 766 posts, it tells you:

• The IRS has accepted and computed the credit
• The credit amount has been applied to your account balance
• The credit is now part of the refund calculation

TC 766 is flexible by design and serves as the IRS’s “catch-all” refundable credit posting mechanism.

What Is TC 768?

TC 768 is reserved exclusively for the Earned Income Tax Credit (EITC).

Because EITC:

• Has unique eligibility rules
• Is highly targeted for fraud prevention
• Is governed by the PATH Act

The IRS tracks it separately using TC 768.

When TC 768 posts, it means:

• EITC eligibility has passed initial verification
• The credit amount has been formally recorded
• The account is now subject to PATH Act payment timing rules

TC 768 does not represent just any credit—it represents one specific credit with special legal handling.

Refundable vs. Non-Refundable: Clearing the Confusion

Despite common assumptions, both TC 766 and TC 768 are refundable credit postings.

The difference is not refundability. The difference is credit identity and control.

• TC 766 = refundable credit, general category
• TC 768 = refundable credit, EITC-only category

Non-refundable credits typically reduce tax liability earlier in the computation and do not appear as these transaction codes on the account transcript.

Why These Codes Matter for Refund Timing

Seeing IRS transaction codes 766 768 post—especially with dates in mid-February—is a meaningful milestone.

It signals that:

• Credit math has been verified
• Credits have cleared internal validation
• The account balance now reflects refundable amounts

For PATH Act filers, this is often the final step before payment authorization.

What Happens Next?

Once TC 766 and/or TC 768 have posted:

• The system recalculates the final refund amount
• Any applicable PATH Act C-Freeze remains in place until release
• The account becomes eligible for refund issuance

When the freeze lifts, the next logical and expected transaction is TC 846 (Refund Issued).

How These Codes Typically Appear Together

It is common for transcripts to show:

• TC 766 for ACTC or other refundable credits
• TC 768 for EITC
• Both posting within the same processing window

This combination indicates that all refundable credit components are now accounted for.

The difference between TC 766 and TC 768 is not about whether a credit is refundable. It is about how the IRS tracks and controls specific credits.

• TC 766 records most refundable credits
• TC 768 is dedicated solely to EITC
• Mid-February posting dates usually mean credit math is complete

Once these codes appear, TC 846 is typically the next step, assuming no additional holds apply.