Tax Credits

Question 1

Tax credits aren’t the same as tax deductions. Tax credits are much better.

Answer 1

Credits come off your tax due, not your income, and they do it dollar for dollar

Question 2

A non-refundable tax credit can erase any taxes you might owe the IRS, but the IRS won’t be sending you a check for any credit that’s left over. These include:

Answer 2

Foreign Tax 
Child and Dependent Care 
Lifetime Learning 
Child Tax 
Adoption
Retirement Savings Contribution

Question 3

Foreign Tax Credit

non-refundable

Answer 3

taxpayer can choose to use either as a credit or as a deduction paid to other countries
– credit can be carried ove

Question 4

Child and Dependent Care Credit

non-refundable

Answer 4

• • child has to be under 13

- - also qualify if your spouse is incapable of self-care so you must pay someone to care for him

Question 5

Educational Credits:
American Opportunity Credit
and Lifetime Learning Credit

(non-refundable)

Answer 5

– AOC: up to $2500 for first 4 years of post-secondary education
– Lifetime Learning: up to $2,000 for graduate or vocational training
You can only claim ONE of these credits

Question 6

Child Tax Credit (nonrefundable)

Answer 6

• • child must be 17 or younger
• • must be resident or citizen
• • must have lived with you for more than half of the year
• • must not have paid for more than half of his own living expenses

Question 7

BUT Additional Child Tax Credit

refundable

Answer 7

$1,000 per child is refundable

Question 8

Senior and Disabled Tax Credit (nonrefundable)

Answer 8

• • age 65 at end of tax year (won’t qualify if. you earn more than $17,500 and are Single/HOH, or $25K if you are married and you both are over 65)
• • retired due to a permanent disability

Question 9

Adoption Expenses (nonrefundable)

Answer 9

• • credit for fees directly related to the adoption process

- - they can be carried over (along with residential energy and foreign tax)

Question 10

Earned Income Credit (refundable)

Answer 10

• • designed for low income working persons
• • The maximum credit as of the 2017 tax year is $6,318 for married filing jointly
• • based on # of dependents and if income is below a certain threshold

Question 11

Premium Assistance Credit (PTC for health insurance)

REFUNDABLE

Answer 11

• • IRS pays subsidy for coverage directly to taxpayer

- - taxpayer must not be eligible for coverage through a government program