ExpertHard1 markMultiple Choice
CPA · Question 30 · Area IV: Individual Taxation
Which of the following tax credits is fully or partially REFUNDABLE?
Which of the following tax credits is fully or partially REFUNDABLE?
Answer options:
A.
Foreign Tax Credit
B.
Lifetime Learning Credit
C.
American Opportunity Tax Credit (AOTC)
D.
Child and Dependent Care Credit
How to approach this question
Refundable Credits: Earned Income, Child Tax (Additional), AOTC (40%), Premium Tax Credit.
Full Answer
C.American Opportunity Tax Credit (AOTC)✓ Correct
The American Opportunity Tax Credit (AOTC) is partially refundable (up to 40% of the credit). The others listed are nonrefundable credits that can only reduce tax liability to zero.
Common mistakes
Confusing Lifetime Learning (nonrefundable) with AOTC (refundable).
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