What are tax credits?

Your adjustments, deductions, and exemptions 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 ________________________. refundable or nonrefundable. (I put refundable)

Page 2 of tax Form 1040 lists the available tax credits. The nonrefundable tax credits are listed in the Tax and Credits section of the form. Select the tax credits. Check all that apply. Check all that apply. Check all that apply. Check all that apply.

__Residential energy tax credit __Foreign tax credit __Education credits (lifetime learning credit) __Casualty and theft loss tax credit __Medical and dental tax credit

The Payments section of Page 2 of tax Form 1040 lists refundable tax credits. Select these tax credits from the list. Check all that apply. Check all that apply. Check all that apply. Check all that apply. Check all that apply. Check all that apply.

__American opportunity tax Credit __Earned income tax credit __Student loan interest tax credit __Health savings account tax credit __Social Security contributions tax credit