5. Tax credits What are tax credits? Your adjustments and deductions reduce your taxable income. Tax credits, on the other hand, are directly applied to the tax that you pay. You may take tax credits regardless of whether you itemize deductions. Many credits are limited, based on income levels, so the amount of a credit may be reduced for high-income taxpayers. The following statement refers to refundable or nonrefundable tax credits. A tax credit that reduces your income tax liability to below zero with the excess being returned to you is Schedule 3 of tax Form 1040 titled, "Additional Credits and Payments" lists nonrefundable and refundable tax credits. Select the nonrefundable tax credits listed on Form 1040 and Schedule 3, Part I. Check all that apply. Charitable contributions tax credit Residential energy tax credit O Capital losses tax credit Foreign tax credit Medical and dental tax credit Schedule 3 of tax Form 1040 titled, "Additional Credits and Payments" lists nonrefundable and refundable tax credits. Select the refundable tax credits listed on Form 1040 and Schedule 3, Part II. Check all that apply. Earned income tax credit O Credit for federal tax on fuels O IRA tax credit O Student loan interest tax credit Health savings account tax credit