Which of the following tax credits is fully or partially REFUNDABLE?

Answer options:

Foreign Tax Credit

Lifetime Learning Credit

American Opportunity Tax Credit (AOTC)

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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Practice the full CPA REG Practice Exam 5

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