ExpertHard1 markMultiple Choice
CPA · Question 43 · Area IV: Individual Taxation
Which of the following credits is refundable?
Which of the following credits is refundable?
Answer options:
A.
Foreign Tax Credit
B.
Lifetime Learning Credit
C.
Earned Income Tax Credit (EITC)
D.
Child and Dependent Care Credit
How to approach this question
Memorize Refundable Credits: EITC, Child Tax Credit (partially), American Opportunity (partially). Most others are nonrefundable.
Full Answer
C.Earned Income Tax Credit (EITC)✓ Correct
The Earned Income Tax Credit (EITC) is a refundable credit. The Foreign Tax Credit, Lifetime Learning Credit, and Child and Dependent Care Credit are nonrefundable (can only reduce tax to zero).
Common mistakes
Confusing Child Tax Credit (partially refundable) with Child Care Credit (nonrefundable).
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