Which of the following credits is refundable?

Answer options:

Foreign Tax Credit

Lifetime Learning Credit

Earned Income Tax Credit (EITC)

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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Practice the full CPA REG Practice Exam 3

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